3 Facts About the Economy That Should Freak You Out

It's Halloween! What better time for three scary facts that should freak you out.

1. Long-term unemployment could last a generation
The median duration of unemployment is now 18.5 weeks, compared with a 50-year average of 8.2 weeks. The unemployment rate for those aged 16 to 24 is nearly 16%. According to a Rutgers survey based on a nationwide sampling, 12% of those who have graduated college since 2006 are either unemployed or can't find full-time work -- and they're the ones with college degrees.

It's hard to exaggerate how dangerous this is -- and how dangerous it can remain.

In a study of men graduating from college between 1979 and 1989, Yale economist Lisa Kahn found that those entering the labor market during poor economic times earned about 7% less than those who graduated when the economy was strong. And the gap persisted for years: 17 years after graduation, Kahn found that those who began their careers when the economy was in recession were still earning less than those who started their careers when the economy was strong, adjusted for inflation and age. Those who stepped into a world of high unemployment were never able to shake it off.

Testifying before Congress in 2010, Til von Wachter of Columbia University offered another startling stat: "The average mature worker losing a stable job at a good employer will see earnings reductions of 20% lasting over 15 to 20 years" when laid off during a recession.

The longer unemployment lasts, the harder it is to recover from. Here's how economist Justin Wolfers put it last year:

Typically in the United Sates, if you're unemployed you're unemployed for three months. You get back to work. You didn't lose many skills. In Europe, folks are unemployed for a year, two years.

Today in the United States, people are starting to get unemployed six months and twelve months. They're losing contact with the world of work. And so the problem is that, even when the economy comes back, it's not clear that these folks are necessarily going to be in contact with the labor market, able to pick up jobs even when the economy generates them. ...

I'm terrified that if we leave millions of people out there decreasingly engaged with the world of work, structural unemployment may become an American problem in ways it has been a European problem.

2. Rising interest rates could be devastating
The federal government has $16 trillion of debt, $11 trillion of which is owned by the public (the rest is held by government entities like Social Security). Last year we paid $230 billion in interest on that debt, so the average interest rate is a little over 2%.

That's incredibly low, and returning to more average interest rates could balloon the deficit. Since 1970, the average interest rate paid on debt held by the public is 5.9%. If interest rates returned to that average, our annual interest tab would rise by $400 billion. That's about four times what the federal government currently spends on education and training. The average interest rate on federal debt was highest in 1982, at 9.3%. Returning to that level would add $800 billion to our annual interest bill, which is more than we currently spend on Social Security.

Households aren't in much better shape. Since 2009, investors have pumped nearly $1 trillion into bond mutual funds, $400 billion into Treasuries, and more still into bond ETFs. If interest rates rise, the value of these investments could fall sharply. The last time interest rates were near current levels, in the 1950s, Treasury bonds lost 40% of their inflation-adjusted value over the following three decades.

3. Most Americans are utterly unprepared for retirement
This stat, from a recent report by ConvergEx Group, should make you cringe:

Only 58% of us are even saving for retirement in the first place. Of that group, 60% have less than $25,000 put away. ... Almost half (48%) of workers ages 45 and up have less than $25,000 saved.

For perspective, Fidelity Investments estimates that a couple retiring this year will need $240,000 just to cover medical bills during retirement.

The ConvergEx report also found that "22% of retirees claim they're taking more than they thought they would out of their accounts, depleting their savings even faster than they anticipated."

The degree to which most Americans are unprepared for retirement is absolutely staggering. Some have accumulated pension benefits, but that's hardly reassuring. Pew Charitable Trusts estimates public pensions are underfunded by $1.38 trillion. Standard & Poor's estimates that S&P 500 companies are $355 billion short of what's needed to cover pension obligations. "Of the 500 companies, 338 have defined-benefit pension plans, and only 18 are fully funded," writes The New York Times.

A typical response when discussing these numbers is, "Well, many people will have to work their entire lives." But that's assuming they'll be able to. BlackRock CEO Larry Fink recently pointed out that a healthy 25-year-old female can now expect to live to near 100 years old. There are few jobs, and even fewer companies, that will accommodate an 85-year-old employee when a stronger, faster, and more eager 25-year-old is the competition.

For many, a fairly meager Social Security check will be the only retirement vehicle to fall back on. And it, too, has its own funding problems.

Scary times.

For the other side of the story, here are 50 things you should feel great about.

Fool contributor Morgan Housel has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On October 31, 2012, at 1:13 PM, DividendsBoom wrote:

    Debt is scary, especially considering that if rates do rise over the next say 4 years, there will be an extra 4-5 trillion to service

  • Report this Comment On October 31, 2012, at 1:14 PM, DividendsBoom wrote:

    Due to the deficits we are running of course

  • Report this Comment On October 31, 2012, at 1:46 PM, fool3090 wrote:

    What really scares the hell out of me is that more than two-thirds of the U.S. economy is consumer spending. So if we are to regain our levels of business, we need to spend. But we don't have the money, so we borrow. And this is what got us into this mess in the first place. Only this time, it's worse.

  • Report this Comment On October 31, 2012, at 1:47 PM, TMFMorgan wrote:

    <<So if we are to regain our levels of business, we need to spend. But we don't have the money, so we borrow.>>

    Real GDP is at an all-time high and total debt to GDP has been declining for five years.

  • Report this Comment On October 31, 2012, at 1:51 PM, TMFMorgan wrote:

    Fool3090,

    Here's another way to look at it, using just the private market:

    This is real consumer spending:

    http://research.stlouisfed.org/fred2/data/PCECC96_Max_630_37...

    And is this consumer debt:

    http://research.stlouisfed.org/fred2/data/CMDEBT_Max_630_378...

  • Report this Comment On October 31, 2012, at 2:02 PM, playtothebeat wrote:

    The third point is especially scary to me, because that's the one that every individual can control.

    Aside from times of unemployment, just about everyone should be able to contribute to a retirement account, even if it's as minimal as $50 or $100/month. It just means sacrificing elsewhere. It might not be easy, but it's doable.

    $100/month for 30 years at 7%/year grows to $113k. That's basically one person's medical bill during retirement years.

    Of course to me this comes back to financial literacy and proper financial education at an early age, which is a whole other issue.

  • Report this Comment On October 31, 2012, at 3:18 PM, slpmn wrote:

    ^Guess you better plan on saving more than $100/month...

  • Report this Comment On October 31, 2012, at 4:03 PM, Darwood11 wrote:

    Long term unemployment, rising interest rates and most Americans assuming that retirement will "Just happen."

    Yep, sounds like hurricane Sandy to me. A confluence of events, and yet most of us assume it will turn out well! Just as in Rockaway Beach in Queens, NY, This isn't "Survivor" and someone won't show up announcing a picnic and a barbie tonight!

    Welcome to reality, where personal planning DOES make a difference!

    Should I be afraid? Nope, I realized a long time ago that there are those who will plan and prepare, and then there are those who will not, and refuse to.

    So to with the recent implosion in home mortgages, in which about 14% are currently underwater. The remaining 86% either own their homes outright, or above "water." My point? I'm not going to dance to the tune of the fiscally irresponsible minority; that's for our politicians to do. As should be readily apparent, they do and will continue to dance for the 14%.

    Will this failure to save, failure to invest and failure to prepare have consequences? Yes indeed. That's why I've trimmed my expectations for returns from my personal investments.

    I also realize that doing everything properly does not assure success. So, are we all in the hands of the mob? Seems like that might be the reality.

  • Report this Comment On October 31, 2012, at 4:06 PM, Mathman6577 wrote:

    Well one "good" thing according to the Fed is that rates will stay low for the next three years so if we can get our act together before then and cut government spending that will help.

  • Report this Comment On October 31, 2012, at 4:07 PM, Johny205 wrote:

    ^Lol

  • Report this Comment On October 31, 2012, at 5:17 PM, CrankyTexan wrote:

    <<So if we are to regain our levels of business, we need to spend. But we don't have the money, so we borrow.>>

    Morgan replied, "Real GDP is at an all-time high and total debt to GDP has been declining for five years."

    What does that have to do with his comment, Morgan? You ignore his point that the government still increases the national debt by $4 billion a day with no end in sight.

    Since you seem to think that the national debt is affordable, at what point will it be a problem to you? I have asked this question to you before and you never answer it.

  • Report this Comment On October 31, 2012, at 5:30 PM, Seanickson wrote:

    I think if you read the article, he clearly states that the debt is a big issue.

  • Report this Comment On October 31, 2012, at 5:38 PM, CrankyTexan wrote:

    No, he says it will be a problem if interest rates rise.

    He also does not mention that the national debt is increasing.

  • Report this Comment On October 31, 2012, at 5:48 PM, mikecart1 wrote:

    4) Most people still believe that buying a house is a good investment and going into debt 15-30 or more years to pay off one is how to prepare for a bright future and great retirement because renting is just so bad even though you wind up spending over half your years paying off for a house simply paying interest before you ever pay for the actual home.

    :D

  • Report this Comment On October 31, 2012, at 5:53 PM, playtothebeat wrote:

    He also doesn't mention that we landed a rover on Mars.. Or that youth unemployment in Spain is 23.3%. Can't mention every fact in a 1000 (or however long) word article. I think Morgan's point is perfectly well made and articulated.

    I read his point as follows: "Regardless of whether the debt goes up or down in the future, its current effect isn't nearly as bad as it could be had the interest rates been at their more 'normal' level. Assuming debt level remains what it is today, its effect on the economy will be much worse than it has been over the past 3 years if interest rates start going up". correct me if I'm wrong.

  • Report this Comment On October 31, 2012, at 6:00 PM, nwjh wrote:

    Structural unemployment is the one that really worries me. Debt and interest rates and retirement problems can be attacked if we have a workforce that is engaged and active. But structural unemployment is more than just people spending so long out of work that they lose touch. It's about structural changes in the economy.

    One reason we are seeing persistent unemployment is not that the jobs are going to China or Vietnam. Those were the bottom-end jobs, in most cases, and getting them back will not improve the economy. Where we have the problem is that we are not moving quickly enough to change with the rest of the world. We still expect the world to follow the US. But no-one will do that if we are clueless about a direction.

    As the economy changes from industrial to information-based (as just one facet of the changes), we aren't keeping up. There is no Industry X that will save us; only changes across the entire economy can do that. The current crop of politicians are unable to see this, and are beholden to groups that want to keep the past in place because they have no other concept of the world. They will force us to stay the same until we are clearly a 3rd-world nation. Then it will be too late, and we WILL get back those bottom-end jobs, because we will have 3rd-world wage levels. At our current rate of progress, we will not even be able to step aside gracefully from the top, like Britain, and make our own way to a suitable position. Our own hubris will bring us down, and the crash will be remarkable. "Mene mene tekel upharsin" may indeed be the message of the times.

  • Report this Comment On October 31, 2012, at 6:00 PM, CrankyTexan wrote:

    "Assuming debt level remains what it is today, its effect on the economy will be much worse than it has been over the past 3 years if interest rates start going up". correct me if I'm wrong."

    It's going to get a lot worse even if interest rates do not increase. That's the point I am making.

  • Report this Comment On October 31, 2012, at 6:32 PM, burrowsx wrote:

    Of your 3 scary facts:

    3. The lack of retirement savings have not changed for decades, dating back to the popularization of defined contribution "pensions" and the liquidation of defined benefit pensions.

    2. The threat of currency manipulators in Germany (by sustaining financial crises across the euro zone with long term austerity, and thus reducing the price of German manufacture), China (thru artificial currency pegs) is at least as great as the threat of high interest rates. US deficits actually reduce the value of the dollar, and have caused these 2 major manipulators to relax some of their worst tactics.

    1. Long term unemployment will only increase if we do not put the money into education that will attract well-trained teachers who care about students, and provide for a learning environment unencumbered by violence and disruptive behavior. You talk about unemployment as if there were some magic wand you can wave to change decades of outsourcing and offshoring. The Reagan Revolution was unfortunately a re-engineering of American capitalism along the models of 1980s Japan zaibatsu cartels. This suited neither our strengths nor was it a sound model -- as exemplified by the zombie institutions of the Japanese financial industry.

  • Report this Comment On October 31, 2012, at 6:37 PM, nwaluli wrote:

    Greatly enjoy Morgan's articles. For me the structural unemployment is the ELEPHANT in the room. I think our country needs to get to the root of our current and future unemployment issues by providing much stronger educational programs in the country's public school systems. The math, science and writing skills that are lacking in so many of our high school graduates is really frightening. As a country, we need to educate our youth so that the jobs they get are jobs that create high demand value creating higher incomes.

  • Report this Comment On October 31, 2012, at 6:41 PM, bearbitten wrote:

    Social Security should be in good shape, if the government will pay up their interest on the loans, all the way back.

  • Report this Comment On October 31, 2012, at 6:47 PM, PositiveMojo wrote:

    Morgan, you always have the most interesting articles, with some solid facts to back up your claims. What do you think about these factors?

    1. Go into any store and flip a piece of merchandise upside down. What does it say? Made in China. It is clear that China has been manipulating it's currency since the 1990's and little has been done to stop it. They have intentionally targeted U.S. industries, like steel. What would happen if that changed?

    2. The U.S. is still importing a lot of oil. In August 2012, we imported 337,840 barrels of crude. What would happen if the U.S. became energy independent? What would that mean toward jobs?

    3. The projections on Social Security, which we all pay into, show that it will remain relatively stable in terms of dollars required, well into the future. Social Security is not expanding.

    However, Medicare is showing enormous, unsustainable growth. What would happen if a real health care program was put in place that actually asked, what needs to be done? Instead of putting a massive beauracracy in place?

  • Report this Comment On October 31, 2012, at 6:49 PM, PositiveMojo wrote:

    Sorry. I left off 3 zeros on the oil. It should have been 337,840,000 barrels.

  • Report this Comment On October 31, 2012, at 6:50 PM, wheelen15 wrote:

    The problem is, those that have held up their hands and enthusiastically asserted "follow me , boys and girls" (political and business leaders)

    while I systematically destroy the earning power of the american worker by allowing and aiding the multinational fortune 1000 (or so) to gut the industrial infrastructure of the US ,,,which took generations to build, and make the third world countries the beneficiaries. Make it in China -Sell it in the US. Use it in the US, support it from India.

    And keep telling the American people, "in the end, everyone will benefit" Unemployment is a problem, part of the problem. Then there's the employment problem or quality of job problem.

    The percentage of those workers enjoying a decent pay, decent benefits etc is probably less than 1/2 of the workforce and declining. Deficit problem wouldn't be a problem if we had more tax revenue generated by the workforce. They don't have to worry about the Apr 15 deadline in Shanghai or Mumbai. Oh yeah, let's all run out and buy another iphone or ipad ....keep the Chinese GDP moving at record levels.Earning power and value of the Ameican worker has been destroyed...thats the problem (for most)

  • Report this Comment On October 31, 2012, at 6:58 PM, STROUGO wrote:

    money comes to money so diversify and watch out for the many in vogue hyped stocks that will go out when the tide changes...stay away from the punch bowl so as to avoid becoming punch drunk and want to avoid being punched in the gut

  • Report this Comment On October 31, 2012, at 7:36 PM, Darwood11 wrote:

    @wheelen15;

    When the politicians were promoting the "service economy" about 20 years ago,a lot of people got on the bandwagon. But of course, that meant replacing factory jobs at $20 an hour for MCD jobs at minimum wage, currently about $8 an hour. It sounded good, as so many of these politically inspired ideas do. But it has ended badly.

    @burrowsx;

    We can pump as much as we want into education. The problem remains training workers. The teachers I know are attempting to fill a huge hole left by the parents, who send their little darlings to school and expect that they will automatically become overachievers and successful in adult life. If they don't, then it's totally the consequence of "the school system."

    @nwjh;

    I agree, structural unemployment is the core problem. We can educate and train, but if there are no jobs, then what? Currently, schools train college graduates for jobs that existed about 10 years ago. Meanwhile, we have a shortage in many good paying jobs. Windmill technicians? Shortage is 10,000. Manufacturing? Shortage is 600,000. It gets worse in engineering. Frankly, we need a more diverse workforce with broader skills, and an ability to shift. We don't have that. Remember a few years ago when "specialization" was all the rage? That might be a necessity but it's my opinion that it has to be based on a firm, broad based foundation. Currently, at the end of 4 years of college, most graduates are in a position to begin to learn. They are not ready to make a serious contribution.

  • Report this Comment On October 31, 2012, at 7:47 PM, JadedFoolalex wrote:

    "There are few jobs, and even fewer companies, that will accommodate an 85-year-old employee when a stronger, faster, and more eager 25-year-old is the competition."

    except when the 85 year old knows far more about how the company runs than does the 25 year old! Who would you hire? The 85 year old who shows up every day because he has a work ethic taught to him by his parents who knew how to work or the 25 year old who thinks of only the weekends, parties, his iPhone, getting laid, etc.?? I know who I would hire!!

    Also, is there no entrepreneurial spirit anymore? Warren Buffet started with a paper route and made a fortune!! Surely, there are more wanna-be business owners out there, no???

  • Report this Comment On October 31, 2012, at 8:31 PM, NickD wrote:

    I"m barley 20 and worth way more then 25k.

  • Report this Comment On October 31, 2012, at 9:52 PM, wolfman225 wrote:

    ^No you're not, if no one wants to pay you that much.

  • Report this Comment On October 31, 2012, at 9:54 PM, robertinvestor wrote:

    every body hear acts like we deserve more

    The problem is that we have too much

    We live better than the rest of the world

    If you do not work you live better than the rest of the world

    There are places in the united states where there is work.

    Years ago you went to there was work

    You worked at a low wage because not working gave you little,a very poor life

    Some one must face it

    We no longer have more resources and abetter educated work force

    Are we educated people in science math etc.?

    No

    Why can these recent college graduates not get a job?

    Wrong major

    Well every one for years has none that an education in say engineering meant a job

    You got the wrong education than go pick apples or some other low paying job

    You choose

    The Us can not guarantee every one will live great

    Sooner or latter we will realize this

    But the debt will be so high it will be too late

    Saying that we are better than Europe or such is worthless.

    till we face that we are living better than most of the world on borrowing we are doomed

    You want more education than I assume you are willing for all American to pay more taxes

    Correct

    I bet not

    You want it with debt

  • Report this Comment On October 31, 2012, at 10:04 PM, scitracker wrote:

    Steps have already been initiated to change the direction of our education, healthcare, energy and infrastructure. Unfortunately, the ship of state doesn't turn on a dime and four years, after the 2nd largest depression in American history is too short a time to expect miracles. Our universities must embrace industry and business to offer, and to direct students toward, the careers/ jobs of the future. Obamacare has already implemented changes in our medical record keeping, expanding the numbers of doctors, and facilities, that use computerized medical records, etc. Obamacare can certainly be tweaked to improve it, but it was needed to insure those not insured and those denied because of pre-existing conditions. Energy independence means little without an updated energy distribution system or a plan to move beyond our dependence on coal and oil. Energy independence does little good if we rescind the increased mileage mandate and forego efficiencies and conservation. Regardless of who wins the upcoming election, jobs will only be created if more money is spent to upgrade our crumbling infrastructure. The Republicans will surely add to the deficit to do this, stating they were forced to do this by the Democrats. The Democrats will do this by increasing tax rates and hoping they can minimize the impact to the middle class.

    Long term unemployment for those unable or unwilling to embrace the education needed to be employed in the jobs of the future will continue. They will be forced to accept the lower paid positions as the government reduces and restricts unemployment compensation and other so called entitlements.

    The impact of higher interest rates can be mitigated if the government reduces/freezes rates on education loans, one of the largest debt issues facing our younger generation.

    There are many ways to attack the social security issue, raising the income level on which the tax is levied being among the easiest.

    We could, and should, require companies to implement 401k programs for employees, and require all employees to participate. Whether companies contribute should be their choice, though it would make sense to allow employees to share in a companies profits by contributing generously whenever the company is successful and profitable.

    I have great optimism that our people, and our country, can once again rise above the issues that have stricken our economy. It only takes a vision, a real plan, not a scare mongering tactic, buy-in by people at all levels of income and hard work by all. Not surprisingly, many wealthy folks are already prepared to sacrifice and to do what it takes to change the direction of our country. Unfortunately, a few ultra-wealthy, willing to spend millions to influence election outcomes, are willing to sacrifice their country for their greed.

  • Report this Comment On October 31, 2012, at 10:16 PM, CrankyTexan wrote:

    "Unfortunately, a few ultra-wealthy, willing to spend millions to influence election outcomes, are willing to sacrifice their country for their greed."

    What a load of crap. Rich people pay the MAJORITY of all taxes. You should be thanking them instead of hating them.

  • Report this Comment On October 31, 2012, at 10:39 PM, HeftyDude wrote:

    Interest rates are a double edge sword. Retirees rely on higher interest rates. With low rates, the amount needed to retire right now is astronomical.

    I thought this was interesting in that regard: http://assetbuilder.com/scott_burns/the_yield_famine_continu...

  • Report this Comment On October 31, 2012, at 10:49 PM, herky46q wrote:

    I want higher interest rates. They are good for my savings account.

  • Report this Comment On October 31, 2012, at 11:15 PM, chrisflyz wrote:

    fewer companies, that will accommodate an 85-year-old employee when a stronger, faster, and more eager 25-year-old is the competition.

    Right. Where are you going to find those kind of 25-year-olds in the future?

    (I know there are some out there. I'm almost done raising 3, but you have to admit it may mean that employment for us when we are 80 might be easier based on an overall assessment of the next generation.)

  • Report this Comment On October 31, 2012, at 11:34 PM, TerryHogan wrote:

    @TMFMorgan

    I'm not trying to be difficult, I just seriously don't get how total debt to GDP could have decreased in a year when GDP declined and the government ran a deficit. (Didn't that happen to you guys in 2009?) Or are you referring to the average over the past 5 years?

    Thanks.

  • Report this Comment On November 01, 2012, at 12:14 AM, TC118 wrote:

    I want increasing interest rates, too. I have mortgages on three houses (two that I couldn't sell when I was changing jobs) and the one I live in now. I could then count on there being higher inflation and charge higher rents, while the principal & interest of my debt (the large part) would remain fixed. These artificially low interest rates are killing me. I am not underwater on my houses, because I saved every penny to keep making my payments on time.

    Now others can refinance because they never put down a decent downpayment and never paid in extra like I did, but I can't refinance the home that I am in because I have too much debt to pay on all three houses relative to income.

    Yet I am managing to subsidize 2 sets of renters at a higher payment than I would have if I refinanced. I am being punished for having lived up to my debt commitments. If the interest rates were not being kept artificially low, I could make these losing investments (that were never intended to be investments in the first place) pay off. Our politicians rig our interest rates as much as the Chinese rig their currency. Yet we pretend to have a free market system...

  • Report this Comment On November 01, 2012, at 12:39 AM, lowmaple wrote:

    When the US Govrnment had the power they wielded it. Now That China has the power and guess what.

  • Report this Comment On November 01, 2012, at 12:47 AM, RouteReflector wrote:

    >> I am being punished for having lived up to my debt commitments<<

    I think it's more you're being punished for, as you said, having too much debt relative to gross income. Whether that's fair or not is a separate issue, but I think it's inaccurate to say you're being punished in your situation because you met and continue to meet your debt obligations.

    On a side note, that's an impressive financial setup you've got going. I'd have a heart attack with 3 mortgages.

  • Report this Comment On November 01, 2012, at 1:36 AM, ScottmFool wrote:

    > I can't refinance the home that I am in because I have too much debt to pay on all three houses relative to income.

    Have you looked at HARP2? The LTV requirements changed as of April of this year (actually earlier, but the computer systems that reflect the new rules took effect around April/May).

  • Report this Comment On November 01, 2012, at 1:38 AM, TomBooker wrote:

    "Morgan, you always have the most interesting articles, with some solid facts to back up your claims."

    Agreed. If you are not reading Morgan, you are missing his work, plus a host of solid references he uses. I know it's good, because I don't want to hear some percentage of it.

    The minute I "like" or agree with everything a journalist has to say, he's absolutely no good to me.

    Beyond the logical conundrum that creates for me, I'll leave it to say Mr. Housel provides more of what I need, as contrasted to what I want.

    Anyway...

    "1. Long-term unemployment could last a generation"

    Yah. Depends upon what you consider the issue with Unemployment.

    In the world of numbers, and not human beings, it could take another 5 years. Which would make a total of 10 years for the neo-grads. A de-facto lost generation of life-time work when you face up to the predictors from that.

    http://tinyurl.com/8ad3bcw

    Or if you actually count human beings, it is more likely that the US as a nation will remain as un- and under-employed as today. A guess of a full generation is fine. we have about 25 years to recoup first.

    http://tinyurl.com/d7dwxqz

    "2. Rising interest rates could be devastating"

    So are artificial never-rising interest rates. Pick your poison.

    "3. Most Americans are utterly unprepared for retirement."

    This is so predictable, it's facile. It's going to take further layers of obesity, but eventually we'll get the self-defeating dipsticks on board. The pig-in-the-python will vote our way to improved retirement means. I'd say anybody under about 50 is going to get screwed.

    or..The Fates will continue to conspire within this New Normal oblig-pluto-democracy and life-expectancy will drop. A necessary clip-off of the extremely expensive medical years would become the duty of every Citizen.

    "Real GDP is at an all-time high and total debt to GDP has been declining for five years."

    That's cheap. I'll skip the arguments of % from write-downs and defaults because that has become the mis-direction bait.

    If one wants to argue for some mystical deleveraging Household behavior, that's great.

    Please extrapolate the line, and let me know in which decade we will get somewhere below nose-bleed heights.

    IMHO, if you want the quick version of a Halloween Special, try this.

    Just about everything which has been done for the good of BigBanks, Corporations, and Shareholders has not been good for the 67% who can't quite put their finger on it. Yet, they know things have progressively gotten suckier.

    The only remaining question is who is going to tell them that it is OK to believe their lyin' damned eyes.

    Because this is the only way it works, and has worked throughout history.

    1)You think you are poor, and you are poor.

    2)You think you are poor, but you're actually nicely wealthy.

    3)You think you are wealthy, and you are wealthy.

    4)You think you are wealthy, but you are actually net poor.

    5)You admit you are net poor, start behaving like it, and start behaving in manners which will actually get you on the road to wealth and greatness again.

    This usually involves people sitting around the dinner table and discussing what will make their life better that day.

    We can't agree on what "progress" actually is or that it will end up where we think it will. So, that's a BS consideration, all gummed-up in economic religion.

    Just go with "improvement" or "better". One step at a time.

    My favorite spot to start is with the fact that we're never going to have to pay off the National Debt. Never.

    With that Halloween Ghost out of the way, then we can focus on how we are going to grow out of it.

    It is clear that Plan A from the past 30 yrs doesn't work.

    It is crucial we begin the process ASAP to do all of the more wrong things, and then we'll find the right one.

    It is our heritage and our destiny.

  • Report this Comment On November 01, 2012, at 2:01 AM, ScottmFool wrote:

    CrankyTexan wrote:

    > You ignore his point that the government still increases the national debt by $4 billion a day with no end in sight.

    fool3090 never said nor implied anything regarding "$4 billion dollars per day." You said that, not fool3090. fool3090 was referring to "consumer spending", not government spending:

    "What really scares the hell out of me is that more than two-thirds of the U.S. economy is consumer spending."

    And yep, the dependency our economy has on consumer deficit spending scares the hell out of me, too.

  • Report this Comment On November 01, 2012, at 2:36 AM, clintstolethis wrote:

    I can't wait to be part of the most stagnant generation in years.

    Hopefully we can expand ourselves outside of an intellectual property economy.

  • Report this Comment On November 01, 2012, at 6:37 AM, duane1x wrote:

    well it's always interesting

    mojo,

    How can you mention that the USA imports 337 MILLION barrels of oil in August and in the same breath bring up energy independence? Oh the cognitive dissonance bro. Anybody who uses the words "energy independence" is either lying to you (politicians) or vastly misinformed. Romney does the sound-good shuffle in his 5 point plan by talking about "north american energy independence" but Canadian and Mexican oil ain't USA oil. USA still gotta pay. Obama says cut 50% by 2020, which is closer to a real target, given the headwinds of price and the tail anchor of a depressed economy. Oh joy.

    bearbite,

    the govt pays the interest on the borrowed funds - but that's all they pay. It's a giant interest only loan. Maybe you mean if they would pay back all the money, you know, the principal. But that ain't gonna happen. Where's the money going to come from? No, we took the trust funds, spent em and they're gone. Try calculating this: what's principal and interest on a 30 year mortgage (bond) for 4.5 trillion dollars? Well that's what we'd have to pay back to pay off the principal and actually build the trust funds back to solvency.

    right on, cranky, except for your comment about tax rate of the rich. You could bring in a flat tax somewhere in the low 20 percent and many of the rich would scream bloody murder. The tax advantages for accumulated wealth are many and bounteous.

    TC118 you aren't subsidizing a living soul. You're charging market rent and apparently it's not enough to cover your costs and give you the profit you believe you deserve. Who buys 3 houses in this market while changing jobs? Soz.

    Morgan, You must be your own troll. In the main piece you talk about the dangers of the high debt level, which has surpassed $16T and is clearly growing well beyond the speed at which GDP will ever grow. But you come back in the comments with some sort of claim about GDP outpacing debt growth over the past 5 years. Yeah, on Mars. Maybe you mean something else by total debt, but it sounds like rubbish.

    Gotta go.

  • Report this Comment On November 01, 2012, at 7:08 AM, TMFMorgan wrote:

    <<you come back in the comments with some sort of claim about GDP outpacing debt growth over the past 5 years. Yeah, on Mars. Maybe you mean something else by total debt, but it sounds like rubbish.>>

    No, on this planet:

    http://research.stlouisfed.org/fred2/graph/fredgraph.png?&am...

    And yes, I did mean total debt. That's why I wrote "total debt."

  • Report this Comment On November 01, 2012, at 7:48 AM, decbutt wrote:

    G.W. Bush borrowed Trillions of dollars and spent it - with the blessing of Haliburton and other companies in which he was a major shareholder - on the war machine.

    It was the crime of the century, and he got away scott-free.

    Direct conflict of interest.

    Cronyism and corruption on this scale is not uncommon, historically, in Europe. But at least there it would have been

    a) a scandal and

    b) illegal

    In the USA it was hidden in plain view. Accepted by most and even applauded by many.

    Think about it.

    Bush didn't just make off with the money that was there, he borrowed even more so that he could also spend future taxpayers money on goods and services from companies he owned as a major shareholder too.

    They made out like Banditos.

    At some point you have to wake-up to what happened.

    "we was robed"

    Annoyingly, people will probably only bother to look back and question what happened after the other shoe drops and interest rates cripple the whole country.

    If they bother to look back for causal effects at all, that is.

  • Report this Comment On November 01, 2012, at 8:01 AM, wjcoffman wrote:

    "Obamacare has already implemented changes in our medical record keeping, expanding the numbers of doctors, and facilities, that use computerized medical records, etc."

    Find a doctor and ask them how they like those changes and how well it has worked to improve the quality of care they are able to provide their patients. Maybe that wasn't the goal of that initiative.

  • Report this Comment On November 01, 2012, at 9:15 AM, mainelefty wrote:

    wjcoffman wrote:

    "Obamacare has already implemented changes ...

    Find a doctor and ask them how they like those changes ..."

    I don't think Obama agrees with me, and if he did he probably would never say so, but ...

    The health care industry is now approaching 20% of gdp. The affordable solution for the 90% has been to abandon private insurance either through expanded use of government programs - medicare, medicaid, VA, federal state and local employee benefits, - or resort to non poverty, non entitlement equivalent by going bareback and relying on the ER and non payment (sometimes leading to bankruptcy) or charity care.

    The surprising thing to me is that anyone advocating for the status quo would not be considered an idiot.

    I'm in no way surprised that some health providers are squealing in pain from the demands for improved productivity that the rest of us have lived with for the last thirty years.

    When health care gets back down to 10% of gdp, I for one think they could do whatever they want.

  • Report this Comment On November 01, 2012, at 10:27 AM, CrankyTexan wrote:

    "The affordable solution for the 90% has been to abandon private insurance"

    You mean destroy insurance companies and fire thousands of their employees.

    While you're at it, destroy all food and real estate companies to make these industries non-profit. Screw capitalism.

    Medicare and Medicaid are perfect example of failed government healthcare programs.

  • Report this Comment On November 01, 2012, at 11:08 AM, PositiveMojo wrote:

    @duane1x. You question the ability for America to become energy independent? The technology is there. The reason that we aren't is because of the special interest groups.

    T. Boone Pickens rightly points out the how natural gas can be used to solve part of the problem. http://www.pickensplan.com/

    Nuclear energy is a very viable option. In the 50 years of nuclear energy there have been three accidents, and here are the results:

    1) Three Mile Island (USA 1979) where the reactor was severely damaged but radiation was contained and there were no adverse health or environmental consequences.

    2) Chernobyl (Ukraine 1986) where the destruction of the reactor by steam explosion and fire killed 31 people and had significant health and environmental consequences. The death toll has since increased to about 5.

    3) Fukushima (Japan 2011) where three old reactors (together with a fourth) were written off and the effects of loss of cooling due to a huge tsunami were inadequately contained.

    These are the only major accidents to have occurred in almost 15,000 CUMULATIVE REACTOR-YEARS of commercial nuclear power operation in 32 countries.

    The sad reality is that China is now leading the way in this technology: http://www.telegraph.co.uk/finance/comment/ambroseevans_prit...

  • Report this Comment On November 01, 2012, at 11:15 AM, mcintorb wrote:

    The headline "Three FACTS about the economy..." should not be followed by two sub-headings that express what "could" happen. "Could" is an indication of speculation or opinion--so I move on.

  • Report this Comment On November 01, 2012, at 11:18 AM, TMFMorgan wrote:

    ^ The meat of each point is factual:

    1) In past studies, those who have started their careers during weak economies face lasting effects.

    2) If interest rates rise by X, our annual interest bill will rise by Y.

    3) Almost half (48%) of workers ages 45 and up have less than $25,000 saved.

  • Report this Comment On November 01, 2012, at 3:40 PM, 48ozhalfgallons wrote:

    Structural unemployment is the child of cheap money. Cheap money reduces the value of labor. As money and labor are reduced in value, employers (corporations) increasingly marginalize labor (employment participation) in favor of capital, cash and executive wages, ergo reducing the velocity of money flow. ƒ(cheap money ÷ labor) increase profits, (flows toward the elite) and decrease velocity (flows away from labor). The function concerning value of labor, revenue, and debt can be expressed as: ƒ(cheap money ÷ labor) decrease revenue as spending and debt increase.

    Low interest by nature of low cost encourages debt and decreases velocity.

    High interest by nature of high cost discourages debt and increases velocity.

    Interest rates have little to do with money supply. Printing money and lending it is what increases money supply regardless of borrowing costs. High or low interest rates only determines the cost of borrowing. Repaying a 1% loan in an environment of decreasing wages and employment (devalued labor) is far more difficult than repaying an 8% loan when wages are rising and jobs are plentiful.

    Pipe Dreams

    Think of interest rates as inversely proportional to the diameter of a pipe. Think of the flow (velocity) of money as a function of economic activity + money supply. The pipe today is too big and economic activity is too small for healthy velocity to occur. Hence, printing money is now the only thing causing velocity. As money and labor lose value, printing loses efficiency.

    Ideally, interest rate tweaks should control the size of the pipe balancing economic activity and money supply (velocity). It's a lot like cooling a nuclear reactor. The Fed and government have engineered a cooling system with a pipe so big that water cannot flow (be exchanged) to cool the reactor. KABOOM!

  • Report this Comment On November 01, 2012, at 4:07 PM, duane1x wrote:

    Hmmm... mojo, different people see things in diff ways. I see 3 major nuclear incidents in 50 years as not a good record. You see not so many outright deaths, so lezz build some mo. Regardless, liquids will be the fuel of choice for drivers everywhere for many years to come.

    Morgan it's a crafty stat - combine all types of debt and slap it in a ratio. Let's break it down for the peeps. $60T of debt to GDP of $15T gives a ratio of 4. Yes I am rounding to give a nice even number. If GDP increases by $1T to $16, and meanwhile the govt takes on $3T in add'l debt raising the total to $63T. 63/16 allows the ratio to decline to 3.9375. True as.

    And this is what is happening as the govt debt blows up. The govt spends and the people tighten. I don't see the feel good in paying off that $16 soon to be $20T with income (revenues) of 2.3 to 2.5T that are proving stagnant. Is there a silver lining here somewhere?

  • Report this Comment On November 01, 2012, at 4:17 PM, TMFMorgan wrote:

    <<If GDP increases by $1T to $16, and meanwhile the govt takes on $3T in add'l debt raising the total to $63T. 63/16 allows the ratio to decline to 3.9375. True as.>>

    And what does it do when private debt declines by $1 trillion (as it has)? And what happens when you use the actual numbers instead of rounded ones? The chart I linked to is accurate.

  • Report this Comment On November 01, 2012, at 4:59 PM, CrankyTexan wrote:

    "And what does it do when private debt declines by $1 trillion (as it has)?"

    Anything can be made to look better if you leave out the bad stuff.

  • Report this Comment On November 01, 2012, at 5:28 PM, duane1x wrote:

    Oh I fully acknowledged that your chart is accurate. But the one more in keeping with your original point is this one:

    http://research.stlouisfed.org/fred2/series/GFDEBTN/

    It is curious that you felt the need to put some sort of positive spin on the debt issue - lipstick on a pig if you will. There are loads of charts around debt to GDP and total debt to GDP. Here is another you might have chosen for total debt:

    http://research.stlouisfed.org/fredgraph.png?g=bIb

    By switching the focus to total debt and charting a ratio it minimizes your thesis.

  • Report this Comment On November 01, 2012, at 5:31 PM, TMFMorgan wrote:

    <<By switching the focus to total debt and charting a ratio it minimizes your thesis.>>

    It has the added benefit of being the most complete and most relevant, however.

  • Report this Comment On November 01, 2012, at 5:49 PM, ScottmFool wrote:

    CrankyTexan wrote:

    > Anything can be made to look better if you leave out the bad stuff.

    Anything can be made to look worse if you leave out the good stuff.

    Your personal catch-phrases add nothing to the discussion.

    There is no doubt (with me, anyways, and likely you) that our country needs to lower our debt levels: personal, federal and state. Both in absolute #s and relative numbers.

    I support your interest in adding more information to the discussion, yet, except for your catchphrases you rarely do that.

    Continually harping on data that is provided, and doing NO legwork to provide your own independent data, just makes you look lazy.

  • Report this Comment On November 01, 2012, at 6:02 PM, CrankyTexan wrote:

    "Your personal catch-phrases add nothing to the discussion......I support your interest in adding more information to the discussion, yet, except for your catchphrases you rarely do that."

    It wasn't my catch phrase.

  • Report this Comment On November 01, 2012, at 6:11 PM, Darwood11 wrote:

    "There are few jobs, and even fewer companies, that will accommodate an 85-year-old employee when a stronger, faster, and more eager 25-year-old is the competition."

    That's an interesting perspective in the article. Let's see, we are comparing someone aged 85 who has survived beyond the expected lifespan of about 76 for men and 79 for women, to a 25 year old with dubious skills.

    Here's a personal perspective. I'm attempting to retire, and my clients won't let me. I'm 66 and have stopped advertising, attending international conferences, etc. for the last 6 years. This is so I can reduce my work load. It hasn't been working. Why is that?

    Welcome back to the early 1900s when people worked until they dropped!

    In all seriousness, it's not reasonable to assume that anyone will work beyond the age of 70. Yes, there will be exceptions. At present, less than 25% of males aged 65 or over are working, according to the Center for Retirement Research at Boston College.

    If someone makes it to 85, there's a 1/3 chance they'll have no natural teeth. They'll be suffering from Type 2 diabetes, cancer, osteoarthritis and various respiratory problems.

    If we even consider that someone 85 has the slightest possibility of beating a 25 year old for a job, then all I can say is, we are in one serious heap of trouble in this country!

  • Report this Comment On November 02, 2012, at 12:39 AM, TC118 wrote:

    @duane1x

    "TC118 you aren't subsidizing a living soul. You're charging market rent and apparently it's not enough to cover your costs and give you the profit you believe you deserve. Who buys 3 houses in this market while changing jobs? Soz.

    A person who lost a job in the auto/bus manufacturing industry and then lost a job in defense contracting. If this were a normal economy I would have a job. I survived numerous rounds of cutbacks at both jobs, but eventually companies don't have enough money to keep even their good employees in this economy.

    I also bought the first home before the market crashed and expected to sell it due to the "full relocation package" that I was promised.

    I don't think I deserve more rent. I interest rates should be allowed to float and that others are responsible for the housing crisis, not me, who has paid off all my past mortgages in full with no late payments.

    @ RouteReflector

    >> I am being punished for having lived up to my debt commitments<<

    I think it's more you're being punished for, as you said, having too much debt relative to gross income. Whether that's fair or not is a separate issue, but I think it's inaccurate to say you're being punished in your situation because you met and continue to meet your debt obligations.

    I didn't have too much debt relative to my income until 1) I lost my job in manufacturing in 2009 and 2) the government did an early rebid of the contract I was on in Sept 2012 and we lost. I attribute both to the lousy economy, since I have an MBA, CPA, and 15 years of experience in the field.

  • Report this Comment On November 02, 2012, at 4:17 AM, v1tanuova wrote:

    "There are few jobs, and even fewer companies, that will accommodate an 85-year-old employee when a stronger, faster, and more eager 25-year-old is the competition."

    True, and also true as Darwood11 says that few males over 65 are working. I don't think anyone should be expected to work if they are disabled. But the ones who want to, and can, should not be forced into retirement because of age discrimination. A man who loses his job at 55, hardly elderly, will be out of work much longer than a 25 year old.

    http://tinyurl.com/dxdzvp9

    People are actually much healthier now for much longer than they were in the 1800's, when labor force participation by >65 year olds is estimated to have been 78%. If it's 20% today, that's not because 65 year olds are sicker, but because in the last century older men have had the means to retire, and have left the work force in droves. And now there's a corresponding expectation that a man will retire. Not a great leap from there to mandatory retirement, which is a fact in many companies.

    If you maintain a healthy weight, get regular exercise, and don't smoke, you will likely be in perfectly good shape at 65 and you should not be a liability to any enterprise.

  • Report this Comment On November 02, 2012, at 8:03 AM, TMFMorgan wrote:

    <<If you maintain a healthy weight, get regular exercise, and don't smoke, you will likely be in perfectly good shape at 65 and you should not be a liability to any enterprise.>>

    At 65, yes. At 75, 80, 85, 95 ... it's questionable.

  • Report this Comment On November 02, 2012, at 11:34 AM, jrj90620 wrote:

    The U.S. Dollar is the common denominator that will take the hit for all problems.Anyone with savings should get out of Dollars and Dollar promises(bonds,etc.) and get into real assets.That means in demand commodities,stocks of great companies(especially doing business in growinng countries),real estate,etc.The U.S. economy is NOT growing,if you use honest inflation numbers.Any improvement in unemployment numbers is being offset by rising inflation.Govt can't give you something for nothing,no matter what ignorant,greedy Americans want to believe.

  • Report this Comment On November 02, 2012, at 11:50 AM, T45235 wrote:

    Those of us that have saved by investing, unless the market picks up, our retirement continues to spiral downward. I've lost 1/2 my nest egg in a reit investment, which my broker insisted I should have. I need to somehow make up that money in the next few years. He made the money off it, not me!

  • Report this Comment On November 02, 2012, at 2:41 PM, Randomoiton wrote:

    Americans are faced with indecision by key business leaders. So what to do? Well one thing we can all agree on is that America Needs A New Business Plan. The plan should focus on key new growth areas. What are these areas? Looking at ourselves now it would be best if we focused on growing:

    1. Efficiency of all areas of our lives, starting with time and energy management. Efficiency will create new products and services and result in much higher levels of yield on our time and money investments.

    2. Green Energy also called Clean Tech. Without a doubt the highest need and showing the highest employment growth. Hurricane Sandy should show us that "distributed power" where we generate local power, say solar on each building and home, will produce significant economic good for the economy as a whole, while creating much more stable energy sources against terrorists and Nasty Weather Gremlins. Energy from the sun can now be stored and used when we need it.

    3. New Transportation Systems. In my humble opinion, we need to focus on high speed trains connected each coast, with slower feeder trains to most towns. The time has come for efficient modern transit systems and electric trains will not pollute like jets and diesels do now.

    4. New Financial Models and Systems that are trustworthy on all levels must come forth, to encourage savings and investment in America and Americans.

    5. Efficient, smart health care systems, the reduce the cost of health care delivery.

    6. Intelligent internet systems that reduce the cost and improve the delivery of products and services for small businesses.

    7. A national referendum on what Americans want as their economic goals, not what politicians nor Corporate Executives want, is needed.

    8. We need alternative energy delivery systems for personal transit units. I vote for hydrogen and fuel cells as the wisest move for our energy companies. Hydrogen from water, using solar energy is THE way to go.

    There are a few other items that should be in our NEW AMERICA BUSINESS PLAN, so contact me if you want to discuss this.

    Jim

  • Report this Comment On November 02, 2012, at 3:00 PM, ByRichie wrote:

    Word to the wise, forget the hipe. Invest in stocks save money and live a healthy lifestyle and the rest will work itself out. Dream big and enjoy your family.

  • Report this Comment On November 02, 2012, at 7:53 PM, hbofbyu wrote:

    Certainly Warren Buffet adds no value to any company he works for - after all he is 82.

  • Report this Comment On November 02, 2012, at 7:59 PM, whatsitMATTer wrote:

    My 2 cents worth (AUD) and that's about 2.08 (US) Start investing! Stocks have a historically higher return over the long term. We can't really worry to much about macro economic levels as we can't control them. We as individuals can only control the micro economic level. If you are a business owner, find ways to be more efficient, and that does not mean reducing staff numbers. If enough of us do that and entertain the idea that at the same time as trying to grow business we can together have a larger impact on macro economics in our regions.

    Saying woah is me and burrying heads in the sand isn't the answer. Neither is fighting about it.

    "If it is meant to be, it is up to me" must be our motto".

    Once we have spending under control (debt) and a growing business (remember every person is equally their own business) we have more to invest. This as a whole makes a country stronger.

    Just my thoughts, and Fool on

  • Report this Comment On November 02, 2012, at 8:06 PM, whatsitMATTer wrote:

    hbofbyu, Try telling that to investors that bought his shares for a pittance. They are now worth $130000.00 each. Also try telling that to the thousdands of jobs he saved by buying into companies and turning those companies around.

    Remember he stepped in to prop up Goldman Sachs et al when no one else had either the inclination or money to. America would be in a much worse position than it is now if it wasn't for the likes of people with Buffetts vision.

    Have some respect.

  • Report this Comment On November 02, 2012, at 9:16 PM, EversoNovice wrote:

    I believe we are past the point of no return - the economic boat is going to go over the waterfall. The question is whether or not we are going to sink once we hit or make the hard choices now that may help us stay afloat. The only way i can see out of this mess (yet doubt it will never happen) is to get big corporations out of the halls of government and level the playing field.

  • Report this Comment On November 03, 2012, at 1:51 PM, carjjc wrote:

    I do not think the debt of defecit is any big deal. Rember Regan and Bush Jr. The ran up the debt way more than Obama. And we can fix this any time by implementing a fair tax policy and taxing the high earners (the bush tax cuts) and eliminating corporate loopholes. Just this will get $200B per year. If we made the taxes really fair we would increase the taxes on high earners even more. I as a corporate stock holder think companies I own pay there CEO and high level managers too much. A higher tax rate would reduce this pay. It would also have a positive effect on jobs and the defecit. You published a report that showed tax cuts done inprove the economy. So all tax increases are not bad either.

  • Report this Comment On November 04, 2012, at 9:20 AM, dmarkiv wrote:

    Look at My take on the Dow Theory on manageyourowntrades.com.

    Those of us in our lifetime have lived through a lot of good and bad times. It just works out that way. I am mostly borrowing shares rather than buying them because of what I think the Market will do. I'll let the economy play its own hand. My research is not always rock solid and I may be wrong now, but It sure looks like a correction of some length is here and now.

  • Report this Comment On November 05, 2012, at 10:09 AM, loginavi wrote:

    Great article, and nice to see some thought on the subject.

    We need to educate our children early in life, the rules of 72 and perpetuity and the rule of $20. These are the rules most Financial Advisers used for years, and I think since forgotten.

    The Rule of 72 will tell you how long it takes for money to double. Just divide 72 by the rate of expected return. (72 / 4%= 18yrs)

    Perpetuity, is how you figure out how much you need to retire on. You take your monthly needed amount divided by the expected rate of return, say 3% ( $900 / .003 = $300,000.)

    The Rule of $20 is a simple rule of thumb, that states for every $20 of retirement income will provide $1 of retirement income per year, adjusted for inflation. To understand this rule fully I suggest you google The Russell Retirement Rule of $20.

    As you can see nothing has really changed in 25+yrs that I am aware of. We have always had the knowledge out there, we just forgot it. Hope this helps.

  • Report this Comment On November 05, 2012, at 11:01 AM, hbofbyu wrote:

    @whatsitMATTer

    Sorry if you did not understand my sarcasm.

    My point was that Warren Buffet is more valuable than ever at 82 years old. I think most people (including Morgan) in this country seem to have a discriminatory bias against age and old people.

    In my last company we hired 2 part time, retired college professors to work on our integration software and write the documentation. In four hours a day they were by far more productive than their full time counterparts who put in 8 hours a day. I was blown away.

    I don't buy "stronger, faster and more eager..." unless you are digging ditches or waiting tables.

  • Report this Comment On November 05, 2012, at 11:10 AM, TMFMorgan wrote:

    <<I think most people (including Morgan) in this country seem to have a discriminatory bias against age and old people.>>

    I have a bias toward physiology. The fact is, an average 25 year old has better physical and mental capacities than an average 95 year old.

  • Report this Comment On November 05, 2012, at 11:56 AM, THuckleberry wrote:

    "I have a bias toward physiology. The fact is, an average 25 year old has better physical and mental capacities than an average 95 year old."

    I have interviewed a number of recent college graduates for job positions. The positions are in the Information Technology field and they had (or claimed to have) degrees in IT. I don't know what they they studied in order to get those degrees, but it certainly didn't appear to be computer related. They didn't strike me as being any more mentally capable then many 95 year old people that I've met. As a matter of fact, they seemed to be significantly duller.

  • Report this Comment On November 05, 2012, at 12:12 PM, damilkman wrote:

    Greetings. One item that really bothers me is this false belief that we can get out of this hole by bringing back manufacturing jobs from China. In my opinion manufacturing is going the way of agriculture. Something less then 2% of our population is required to feed us when 250 years ago it was probably some number between 50-75%. China will be in worse shape when advances in technology make the jobs of 100 million workers obsolete. Within a generation I see manufacturing accounting for 2-5% of the worlds employment base at best.

    In my opinion the biggest problem is an utter lack of interest in many young people in doing anything hard. The concept of spending a quarter million dollars to get an easy degree that gives you few marketable skills and expect someone to hand you a job is insane. I have had friends in technology companies who are in a perpetual state of hiring because they just cannot find anyone qualified. Were not talking specific and arcane skills as they are willing to train.

    The real problem to me is the skill sets that potential new employees are gaining does not match what the real world needs.

  • Report this Comment On November 05, 2012, at 2:30 PM, superbinvesting wrote:

    1. Although long term unemployment may potentially affect an entire generation, the lack of opportunities will spark a growth in entrepreneurship that will create even more jobs and continue keep America on top.

    2.While rising interest rates can have a potentially devastating effect, the US Fed will not raise interest rates by full percentages points each quarter. Look for a slow, steady gradual increase once the economy and job market are back on their feet.

    3.The financial crisis of 2008 and the slowdown in the job market has taught Americans the importance of saving. While many are not prepared for retirement, many more will learn from their mistakes, develop saving as a habit and realizing that they are in control of their own destiny.

    www.ingeniousinvesting.com

  • Report this Comment On November 05, 2012, at 3:16 PM, ibuildthings wrote:

    If only it was a Republican in the White House now, this wouldn't just be a front-page Fool story, it would be front page in every paper. Then it would get the attention it deserves.

    Causes:

    1) Times were good for a long time. So you could be an idiot about things and still get by. Our people need to remember why we plan our lives more than one day at a time.

    2) Education just isn't what it used to be. Part of that is due to #1 above; Children think they won't ever be left to starve, so video games and the opposite sex are more appealing than homework. This and a decline in educational quality aren't problems that can be solved by throwing more money. We spend as much or more of our national GDP now on education compared to any time in our history, but the outcome is worse than ever.

    3) All those new social values are leading to family problems that can't be fixed in school. One of my close relatives caught her husband cheating, and now she is a single mom with skills in an industry that has been in decline. She can't afford private school for the kids, and can't afford to live where the public schools can be trusted. He walked away to his new conquest, leaving his ex to be mom, dad and breadwinner.

    There aren't enough billionaires in the world to pay for the problems due to those three sources. Any political party that can actually fix these issues with action instead of babble will get my support.

  • Report this Comment On November 06, 2012, at 2:34 PM, tomd728 wrote:

    We never hear much on what technology has done to reduce workforce. While tech has and continues to add to their own sector of employment, the replaced may never find their way back in to their specialty,training,or schooling.

    Is it not the foremost interest in enterprise today to reduce costs whenever possible to produce bottom line results that exceed prior months,quarters,years ?

    That is the workplace today and any starry eyed vision by the left or those who simply wish for better circumstances must find another way.

    Tom Durkin

  • Report this Comment On November 07, 2012, at 1:00 PM, maninatl wrote:

    People are generally ignorant when it comes to costs of owning a house. They think it is just the interest that is a major unwanted expense of having a mortgage. People forget that they do pay more in taxes that they pay in interest over the life of a loan. Taxes NEVER stop and that is a major unwanted expense if you think owning a house is an investment!

  • Report this Comment On November 07, 2012, at 3:57 PM, devoish wrote:

    'We never hear much on what technology has done to reduce workforce'. - tomd728

    Yes we do.

    What we never talk about is why that has not provided lower retirement ages and the opportunity for low cost education, both of which would lower unemployment.

    Because 10% unemployment just means we worked hard and were productive enough to retire younger.

    Best wishes,

    Steven

  • Report this Comment On November 07, 2012, at 6:06 PM, TheRealRacc wrote:

    TMFMorgan ' s comment of the year: "I have a bias toward physiology."

    Made the whole discussion worthwhile. Keep up the good work as always.

  • Report this Comment On November 11, 2012, at 2:56 PM, nicholash wrote:

    If the interest on debt is a little over 2% for $230 billion it appears that the government entities are not receiving interest. $230 billion/$11trillion=2.1%

    " The federal government has $16 trillion of debt, $11 trillion of which is owned by the public (the rest is held by government entities like Social Security). Last year we paid $230 billion in interest on that debt, so the average interest rate is a little over 2%."

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