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The Generational Short Part 2: Who Will Boomers Sell Their Stocks To?

Tyler Durden's picture


Submitted by Charles Hugh-Smith of OfTwoMinds blog,

Those who see the current era as the New Normal also have one logical action: sell now at the top and wait for the smoke to clear in 2016.

In The Generational Short: Banks, Wall Street, Housing and Luxury Retail Are Doomed, I addressed how generational changes in values could affect the stock market. That values change over time is common sense, and so is the idea that values drive choices about purchases, debt and investments that ultimately influence stock valuations.

The implicit conclusion: the Baby Boomers won't have anyone to sell their stocks, real estate and bonds to. Correspondent Eric A. demolished the fantasy that Gen X will have the income and assets to buy the Boomers' stocks held in IRAs, local government and union pension funds and 401K accounts in Generation X: An Inconvenient Era (May 23, 2013).

The idea that Gen-Y will have the wealth (not to mention the desire) to buy the Boomers' stock market portfolios at nosebleed valuations poses a peculiar conundrum: the only way Gen-Y will have the wealth to buy Baby Boomers' assets is if the Boomers sell their assets and pass the wealth along to Gen-Y.

So if both Gen-X and Gen-Y are out as buyers, who's left to buy the tens of trillions of dollars of Boomer assets at bubblicious prices? Given that other nations face the same demographic dilemma, the answer appears to be: no one.

Let's move on to the question of whether the current valuations are an aberration or the New Normal. This matters, because if the period from 1994 to 2014 is a one-off aberration, that means stock valuations will eventually revert to historical levels far below current valuations.

Here is a chart of the Dow Jones Industrial Average (DJIA) from 1955 to the present. Does the current era of bubbles and crashes look remotely normal, compared to the decades prior to 1994?

If this is the New Normal, then what that means is a bubble and crash every 7+ years is now the expected cycle. Here is an annual chart of the DJIA (courtesy of Harun I.; comments by CHS) that shows the megaphone pattern that's been traced out in the New Normal era of huge bubbles and equally monumental crashes:

If this is indeed the New Normal, wouldn't it make rather obvious sense to sell at the top (i.e. now) and wait for the New Normal crash and bottom around 2016?What evidence is there that this latest and greatest bubble is sustainable?

Next, let's look at the fundamental relationship of stocks to the nation's gross domestic product (GDP), a broad measure of the economy. Current sky-high stock valuations are not just aberrations in terms of previous stock prices--they're aberrations in terms of stocks' valuations compared to the nation's entire economy.

Doesn't it boil down to this? If we can't come up with a viable cohort who can afford (and is willing to place that generational bet) to buy Baby Boomer assets at current bubble-level prices, then it follows that as the first Boomers start selling their assets, prices will fall as there is nobody left to buy them, at least at these valuations.

Those who see the current era as an aberration have one logical action: sell now and get out while the gettings good.

Those who see the current era as the New Normal also have one logical action: sell now at the top and wait for the smoke to clear in 2016.

Now that it's evident that central banks have been buying stocks to prop up the bubble-level valuations ("Cluster Of Central Banks" Have Secretly Invested $29 Trillion In The Market -- Zero Hedge), some may assume the central banks will buy another $29 trillion in stocks from the Boomers--or what the heck, make it $50 trillion or $100 trillion--there's no limit, right?

How safe is that bet, i.e. that central banks will be able to buy most of global stock market without any consequences or blowback?

It might be safer to hope the Martian Central Bank prints a few trillion quatloos and shows up to save the bubble-era Boomer portfolios from self-destruction.


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Mon, 06/23/2014 - 08:16 | 4884999 tarsubil
tarsubil's picture

The Fed! And you know it!

Mon, 06/23/2014 - 08:20 | 4885010 rbg81
rbg81's picture

The real question is:  who will their kids sell it to?  Most Boomers will still be holding the stock when they die.

Mon, 06/23/2014 - 08:22 | 4885012 SheepRevolution
SheepRevolution's picture

Belgium.... and Belgium!

Mon, 06/23/2014 - 09:04 | 4885106 Thought Processor
Thought Processor's picture



The FED and it's primary dealer proxies have been propping this market up since 2003 though one could argue earlier to 2001 and even 1997 with evidence that much of this began after the 1987 crash and the origination of the PPT.

Everyone knows that this whole thing is a sham now.  We are so far away from 'Free Market Capitalism' it's laughable.  The system as it operates now is unsound and currently operating without a foundation (ie: foundation of both laws protecting investors and asset holders as well as real price discovery).  


When the Gov. and Cronyism runs rampant this is exactly what happens-  Potential buyers chose not to participate.  

Why would any sane person put their money into an unsound system?   

Mon, 06/23/2014 - 09:25 | 4885186 Pladizow
Pladizow's picture

"It might be safer to hope the Martian Central Bank prints a few trillion quatloos...."

Perhaps this is part of the alien invasion Krugman is forecasting?

Mon, 06/23/2014 - 11:58 | 4885738 Save_America1st
Save_America1st's picture

Yet another question is why aren't the "Boomers" buying mining and other commodity stocks along with precious metals right now?  What, is that area too inexpensive to take a look at or are they too snoby to own anything non-Goog or non-Apple? 

Talk about a historically oversold, under-valued, and massively bottomed-out sector that's about to explode!  That'll be the mother of all bubbles when people (and hedgefunds) finally figure that out and jump in there to grab anything they can.  Funny thing is that although it will be a massive bubble, it will still be the only area based on real fundamentals and not just the Fed pumping them up artificially...but so many are going to rush into it at once and chase it up that it's defintely going to have a blow-off top at some point.

Buy mining stocks now...most miners that have survived these past 3 ugly years at least have shown that they were strong enough to survive and smart enough to downsize and reduce capex for a while until this all blows over.  They're probably producing what they can under the avg. cost of prod. per ounce in gold and silver too and still making a small profit.  Just enough to get buy.  They know their time is coming very soon now.

Once they start getting bought up they'll be able to expand production and things will really take off quick.  That's when you take your winnings above your core holdings and start buying more phyzz Ag and Au.  It'll be getting much more expensive going forward, so you may as well use your mining stock winnings to buy as much phyzz as you can find with it.  Free phyzz, bitchez!!! 

The "Boomers" and others who haven't been paying attention are just going to have to sit on the sidelines and cry about it as their equities crash all to hell. 

They have been warned over and over again...

Mon, 06/23/2014 - 12:05 | 4885802 COSMOS
COSMOS's picture

They dont have to bother selling.  Most of those companies won't be around.  The manufacturing ones will be completely replaced by Chinese.  That leaves a bunch of sh** services companies that dont matter.

Mon, 06/23/2014 - 12:17 | 4885856 Eirik Magnus Larssen
Eirik Magnus Larssen's picture

China is not without its own set of (very big) problems.

Mon, 06/23/2014 - 13:01 | 4886010 Gaius Frakkin' ...
Gaius Frakkin' Baltar's picture

Maybe they can set up avatars that can trade and play hot-potato long after they're dead! Then, Uncle Satan can impose heavy taxes on these virtual accounts since no one will care!

Mon, 06/23/2014 - 09:32 | 4885213 Top Gear
Top Gear's picture

A crony is merely a friend. With whom else would you trade market goodies? Is "adversary capitalism" the answer?

Mon, 06/23/2014 - 10:09 | 4885365 max2205
max2205's picture

Charles you short first

Mon, 06/23/2014 - 10:22 | 4885411 toady
toady's picture

A crony is not merely a friend. If the author wanted to say friend he would have used the word friend.

The word crony has a negative connotation. It indicates the "friends' are up to no good.

Mon, 06/23/2014 - 12:38 | 4885909 SWCroaker
SWCroaker's picture

Have always viewed cronies to mean 'friends of the corrupt", not friends of me or decent folk.  They and their cronies may be be best buds, but they're also a-holes, so ...

Edit to add: peek @ dictionary shows both meanings, with your's primary, but mine more typical in modern usage.    Um, I'm old as dirt; how *old* are you!?!

Mon, 06/23/2014 - 13:34 | 4886167 toady
toady's picture

Just turned fiddly. Still just a youngster to some, older than dirt to others.

Mon, 06/23/2014 - 12:17 | 4885854 Eirik Magnus Larssen
Eirik Magnus Larssen's picture


Mon, 06/23/2014 - 08:22 | 4885013 tarsubil
tarsubil's picture

From what I can see, they will still own their ridiculously big houses but they will have spent all the stock money by the time they die.

Mon, 06/23/2014 - 08:25 | 4885024 Tortuga
Tortuga's picture

They need the "ridiculously big houses" for the tax free trust method of passing on wealth.

Mon, 06/23/2014 - 08:28 | 4885034 tarsubil
tarsubil's picture

I don't think that was their concern when buying a house. If they live long enough, they'll probably use a reverse mortgage to supplement their lifestyle at the end of their debauched life so sorry kiddos. It's the slash and burn generational wealth destruction method.

Mon, 06/23/2014 - 08:34 | 4885047 Handful of Dust
Handful of Dust's picture

Foreigners don't want our stawks; they want houses. Student Yutes with heavy loan debt don't want stawks either. Any money theyget goes straight to pot, gurls and parteeing. Seniors don't want stawks because they need to survive on 0.01% savings yield and need to eat.

Mon, 06/23/2014 - 09:49 | 4885277 magnetosphere
magnetosphere's picture

dont worry we can always kill the old farts if we need to

Mon, 06/23/2014 - 11:20 | 4885630 TuPhat
TuPhat's picture

I'm an old fart and I expect you will try.  I'm ready for it.

Mon, 06/23/2014 - 11:39 | 4885691 Smiddywesson
Smiddywesson's picture

Come now, let's get this over with...


The Dead Collector: Bring out yer dead.

[a man puts a body on the cart]

Large Man with Dead Body: Here's one.

The Dead Collector: That'll be ninepence.

The Dead Body That Claims It Isn't: I'm not dead.

The Dead Collector: What?

Large Man with Dead Body: Nothing. There's your ninepence.

The Dead Body That Claims It Isn't: I'm not dead.

The Dead Collector: 'Ere, he says he's not dead.

Large Man with Dead Body: Yes he is.

The Dead Body That Claims It Isn't: I'm not.

The Dead Collector: He isn't.

Large Man with Dead Body: Well, he will be soon, he's very ill.

The Dead Body That Claims It Isn't: I'm getting better.

Large Man with Dead Body: No you're not, you'll be stone dead in a moment.

The Dead Collector: Well, I can't take him like that. It's against regulations.

The Dead Body That Claims It Isn't: I don't want to go on the cart.

Large Man with Dead Body: Oh, don't be such a baby.

The Dead Collector: I can't take him.

The Dead Body That Claims It Isn't: I feel fine.

Large Man with Dead Body: Oh, do me a favor.

The Dead Collector: I can't.

Large Man with Dead Body: Well, can you hang around for a couple of minutes? He won't be long.

The Dead Collector: I promised I'd be at the Robinsons'. They've lost nine today.

Large Man with Dead Body: Well, when's your next round?

The Dead Collector: Thursday.

The Dead Body That Claims It Isn't: I think I'll go for a walk.

Large Man with Dead Body: You're not fooling anyone, you know. Isn't there anything you could do?

The Dead Body That Claims It Isn't: I feel happy. I feel happy.

[the Dead Collector glances up and down the street furtively, then silences the Body with his a whack of his club]

Large Man with Dead Body: Ah, thank you very much.

The Dead Collector: Not at all. See you on Thursday.

Large Man with Dead Body: Right.

Mon, 06/23/2014 - 11:53 | 4885760 magnetosphere
magnetosphere's picture

may the best man win

Mon, 06/23/2014 - 12:41 | 4885927 OldPhart
OldPhart's picture

FU, too!

Mon, 06/23/2014 - 20:55 | 4887744 Abbie Normal
Abbie Normal's picture

How, by sending a poison text from your Mom's basement?

Tue, 06/24/2014 - 13:59 | 4889965 magnetosphere
magnetosphere's picture

geezer please it is precisely the kids without jobs who will provide fodder for the revolutionary vanguard and send you to an early grave.

btw the text won't come from your mom's basement.  from her bedroom.  ohhhhhhh!

Mon, 06/23/2014 - 13:56 | 4886232 TheReplacement
TheReplacement's picture

Do they own or owe for those houses?  How will they pay property taxes on those houses? 

Mon, 06/23/2014 - 11:40 | 4885696 NESD
NESD's picture

The stocks many not pass to future US generations but go instead to foreigners with $US they have to do something with. Chinese sell us cheap plastic crap and toxic goods and use a portion to buy $billions of US assets including stocks. Not entirely bad because they have less incentive for military or financial mischief if they have large US assets at risk.

Mon, 06/23/2014 - 11:41 | 4885700 JRobby
JRobby's picture

By then all assets will have been confiscated.

Mon, 06/23/2014 - 13:02 | 4886028 NotApplicable
NotApplicable's picture

You mean "bailed out" via "nationalization" by the CBs.

They'll call it something different by then, though.

Mon, 06/23/2014 - 12:09 | 4885825 Sonic the porcupine
Sonic the porcupine's picture

The fed/belgium and the Chinese (at a huge discount).

Mon, 06/23/2014 - 11:46 | 4885723 SethDealer
SethDealer's picture


Mon, 06/23/2014 - 08:17 | 4885001 AlaricBalth
AlaricBalth's picture

Who will Boomers be selling stocks to?
The Fed, that's who.

Mon, 06/23/2014 - 08:19 | 4885005 GetZeeGold
GetZeeGold's picture



I had a dog.....his name was BINGO!


Little fella made me a fortune in gold....and he could get me a beer out of the fridge.

Mon, 06/23/2014 - 08:43 | 4885065 Paper CRUSHer
Paper CRUSHer's picture

 Hey GZG,

After reading a___________ article such as this............ is compelled to commit_______________. (fill in the blanks)

Mon, 06/23/2014 - 09:34 | 4885218 DeadFred
DeadFred's picture

So Germany gives up on getting their gold back. I guess they gor some dirt off of tapping Merkel's phone after all.

Mon, 06/23/2014 - 10:47 | 4885505 bonin006
bonin006's picture

At least the 3 comments below the article point out it is BS

Mon, 06/23/2014 - 08:47 | 4885061 mtl4
mtl4's picture

Exactly.........I have 2 issues with this article


1) Bearish megaphone will be parabolic not linear (you think the market's been running hard so far, foot on the floorboards right til the end)

2) Who the heck is going to cover the shorts if the SHTF?  you'll probably be getting worthless fed bucks (aka treasuries in return)


Now's the time to buy some hard assets with all that fiat money before inflation goes into overdrive.

Mon, 06/23/2014 - 09:30 | 4885206 sessinpo
sessinpo's picture

mtl4    Now's the time to buy some hard assets with all that fiat money before inflation goes into overdrive.


Money is disappearing down a debt hole, not inflating. Yes, prices of many things such as food and energy is up. But wages are down.  That means for the average person, you don't have more income to chase goods. You have dwindling income chasing goods. Deflation. Your wages are stagnant or going down so you have less. Money becomes more valuable to get higher priced goods. Just the fact that prices are up does not equate to inflation.

Mon, 06/23/2014 - 10:25 | 4885394 mtl4
mtl4's picture

I agree you bascially have stagflation right now (no growth, inflation of hard goods) but to me the reason why the brought Bernake (the self-proclaimed expert on the great depression) is to prevent the dying star from collapsing on itself.  So instead of contracting the money supply like they did during the Great Depression, they will continue to play games with turning the QE spigot on/off until the asset prices will shoot for the moon (then you get your spectactualr deflationary crash when it unwinds).  We all know the cronyism will continue so even if individual wages are not growing the money is still out there flowing into assets of all sorts (Blackstone - Real Estate, Major Banks - commodities, etc) but eventually unless the Fed (all goverments are really playing this game now) can soak up all the QE it put out there, inflation will continue to accelerate (but don't expect to see it in the CPI stats because everything looking like inflation will be excluded).

Mon, 06/23/2014 - 11:47 | 4885726 Four chan
Four chan's picture

so the fed is shooting for a gas giant rather than a dwarf star or black hole?

Mon, 06/23/2014 - 12:00 | 4885782 mtl4
mtl4's picture

It's all about where you are in the progression.......given the size of the economy I'd say we're on the 2nd track.

Mon, 06/23/2014 - 12:08 | 4885818 Jerk_Store
Jerk_Store's picture

so the fed is shooting for a gas giant rather than a dwarf star or black hole?

Or maybe just a gassy black hole


Mon, 06/23/2014 - 12:19 | 4885860 toady
toady's picture

I love the smell of napalm in the morning. 


One day this war is gonna end.

Mon, 06/23/2014 - 10:33 | 4885455 sidiji
sidiji's picture

It'll be good to have more Chinese and other asians in USA, f kers work hard and what they earn they hold on make way for the new landlords you deadbeats

Mon, 06/23/2014 - 12:14 | 4885838 Jerk_Store
Jerk_Store's picture

It'll be good to have more Chinese and other asians in USA, f kers work hard and what they earn they hold on make way for the new landlords you deadbeats


Already happening in the CA bay area..They already chased the formerly "middle class" out to the valley where 20 years ago, it would have been unheard of to want to live there.

Mon, 06/23/2014 - 12:22 | 4885869 toady
toady's picture

It was already like that in the nineties when I lived there. I imagine it's only worse now.

Mon, 06/23/2014 - 08:17 | 4885002 Oldwood
Oldwood's picture

Sold all of mine in 2010.

I know I have "lost" so much money. But I say fuckem. They will probably burn the whole thing to the ground but I won't help with my pittance.

Mon, 06/23/2014 - 08:49 | 4885091 dontgoforit
dontgoforit's picture

We sold the mini-mansion in '07 (JIT for sure); but like you, we bailed at 13,800 and that mutha looks like it's going to go to 20,, yeah, we lost out too, but at our age, the 3% we're getting at least keeps us from losing too much ground.  At 65 you can't take the risk like you use to.  Not enough time to recover.

Mon, 06/23/2014 - 08:19 | 4885006 tom a taxpayer
tom a taxpayer's picture

Mt. Dow Dispatch from bivouac at elevation 16,947 feet (2300 hr EST June22). Excited. Hard to sleep…we rise at 0930hr for historic attempt to reach Mt. Dow elevation 17,000 ft. Bitter cold wind slashing tent. Exhausted from last week's several attempts from Camp IV (elev. 16,800 ft) to reach elev. 17,000 ft. Tactical decision on Friday (1600 hr) to bivouac at 16,947 ft and not to return to Camp IV. Rest over weekend. On Monday only need to climb 53 feet, and we have 6 1/2 hrs to do it.  

Looks like we'll ascend to historic 17,000 ft elev. before the Mt. S&P expedition reaches its historic 2,000 ft elev.  It's all just friendly "competition". We're both part of the Federal Reserve Expeditions Incorporated with the best tools, equipment, oxygen, Sherpas, and monetary support…so there's never a danger of falling or failing to reach new heights. 

(cough, cough)  Air is thin…need a fix of my federal reserve oxygen…

Mon, 06/23/2014 - 08:22 | 4885014 andrewp111
andrewp111's picture

The Central Banks will buy up all the stocks, all the land, commercial real estate, residential real estate, and everything else to bail out the Boomers. Then the resulting inflation wipes out the Boomers anyway.

Mon, 06/23/2014 - 08:26 | 4885028 eddiebe
eddiebe's picture

The central banks working for some megalomanic dynasties will buy everything of worth with worthless paper. We will all be debt-slaves til we wake up and eradicate the parasites. And then the whole tragedy will start over again, because greed is hardwired into our nature.

Mon, 06/23/2014 - 08:27 | 4885030 tostaky06
tostaky06's picture

look like fascisme ... 

Mon, 06/23/2014 - 08:37 | 4885048 what's that smell
what's that smell's picture

collateralized boomer obligations: C-BOO.

bundle the boomer assets, give them a AAA rating, sell them to Zimbabwean Central Bank (ZCB).

ZCB accepts the C-BOOs as collateral and rehypothecates them to infinity.

"investors" borrow Zimbabwean fiat to purchase boomer assets.


Mon, 06/23/2014 - 08:28 | 4885035 fonzannoon
fonzannoon's picture

some boomers maybe. But any smart/fortunate boomers have little overhead and fixed costs. They, in aggregate, will be better off than the generations that come after them. Either way the best way to fix this system is to give each american 5k a month and have an annual medical exam. If at any point your medical costs exceed a certain amount and you can't cover it yourself you are immediately executed. 

Mon, 06/23/2014 - 08:37 | 4885052 pods
pods's picture

Kind of a Running Man meets Hunger Games with a twist of economics?


Mon, 06/23/2014 - 10:19 | 4885402 Postal
Postal's picture

Don't encourage them: They can come up with enough kooky ideas on their own.

Mon, 06/23/2014 - 08:37 | 4885053 tarsubil
tarsubil's picture

A very modest proposal.

Mon, 06/23/2014 - 08:38 | 4885058 fonzannoon
fonzannoon's picture

I like the junk, I can just picture that guy sitting going "No!!! No that would be bad!"

Mon, 06/23/2014 - 09:16 | 4885160 greatbeard
greatbeard's picture

I am one of those boomers you speak of, little overhead and fixed costs.  I live a very modest life, but is partly out of necessity and partly out of choice.  I decided I'd rather retire from the race at 55 to enjoy whatever it is I have left in the tank.

Although I'm looking at it dead in the eye, I don't disagree with your health system much.  I think euthanasia ought to be a viable and readily available option.  I have serious health issues that I just deal with.  I have friends and relatives that have unlimited medical available to them, with the VA being one of the biggies.  They consume untold multiple thousands of dollars in health care costs every year, an astounding amount.  In spite of this, in spite of having every test and procedure done, in spite of unlimited pharma, they seem to have the same amount of nagging, undiagnosed, ailments that I do.


Mon, 06/23/2014 - 09:57 | 4885306 Iriestx
Iriestx's picture

Nothing like watching 80% of our health care spending going towards people that are eating themselves to death while they idle away on their "mobility scooters," cashing in on "disability" dispersements that they brought on themselves with their sedentary and obscenely unhealthy choices and/or are in the last 5 years of their life.

Mon, 06/23/2014 - 10:56 | 4885536 insanelysane
insanelysane's picture

Let's pick on the fatties and ignore all those skinny housewives that are taking all sorts of mommy's little helpers because their "friends" have better countertops and more facebook likes.

Mon, 06/23/2014 - 11:56 | 4885771 therover
therover's picture

Maybe the fatties can run over the skinnies and then die themselves when their scooter tips over.

Mon, 06/23/2014 - 13:03 | 4886030 allgoodmen
allgoodmen's picture

Where's the chassis sag guy. I'd like him to weigh in here.

Mon, 06/23/2014 - 12:16 | 4885851 Jerk_Store
Jerk_Store's picture

Let's pick on the fatties and ignore all those skinny housewives that are taking all sorts of mommy's little helpers because their "friends" have better countertops and more facebook likes.


I'm an american damnit. I deserve granite countertops..

Mon, 06/23/2014 - 13:22 | 4886047 NotApplicable
NotApplicable's picture

New, upscale student housing here in State U. town is even advertising granite countertops. You know, cuz that's what all the cool kids have now days.

Adds an element of danger to the drinking games, I guess.

Mon, 06/23/2014 - 11:51 | 4885745 Hulk
Hulk's picture

LOL !!! As long as the execution is by slow heroin overdose, I'm all for it !

An IV drip next to the Barcalounger during an episode  of Shark Tank would be a marvellous way to go !!!

Mon, 06/23/2014 - 08:32 | 4885042 tarsubil
tarsubil's picture

The people that receive the printed money are not the ones that suffer. Do the banks that get the printed money today suffer? No.

Mon, 06/23/2014 - 08:37 | 4885055 pods
pods's picture

Biggest buildings in every major city.

Nevermind the stadiums.


Mon, 06/23/2014 - 12:29 | 4885884 Terminus C
Terminus C's picture

Stadiums are owned by the banks too.

Mon, 06/23/2014 - 13:10 | 4886058 NotApplicable
NotApplicable's picture

While millions, who never use them, pay the price.

Mon, 06/23/2014 - 12:30 | 4885887 RaiZH
RaiZH's picture

I hope you are right and hope this happens sooner than later!!

Mon, 06/23/2014 - 08:23 | 4885015 Species8472
Species8472's picture

What makes rather obvious sense is that you should use a logrithmic price sacle for these charts.

Mon, 06/23/2014 - 08:32 | 4885043 DonutBoy
DonutBoy's picture

Agreed, but not for the ratio of the Dow to GDP.  That chart is properly scaled and definitive.

Mon, 06/23/2014 - 10:53 | 4885514 Slim
Slim's picture

Unequivolcal agreement on the log scale here.  These charts don't work otherwise with the long time series.

On the Dow to GDP one part to consider is that globalization has seen large US companies get increasing profits from outside the US.  A global GDP number for reference would make some sense too.


Mon, 06/23/2014 - 08:25 | 4885017 AdvancingTime
AdvancingTime's picture

We have placed the young in a horrible position. An American born in 1945 can expect nearly $2.2m in lifetime net transfers from the "state" far more than they pay in, and far more than any previous group.

A study by the International Monetary Fund in 2011 compared the tax bills of what different age citizens pay over their lifetime with the value of the benefits that they are forecast to receive. The boomers are leaving a huge bill. Those aged 65 in 2010 may receive $333 billion more in benefits than they pay in taxes.This is a heavy burden to place upon the young. The article below delves deeper into this subject.


Mon, 06/23/2014 - 10:00 | 4885332 Iriestx
Iriestx's picture

Keep kicking that can!

Mon, 06/23/2014 - 11:32 | 4885659 TuPhat
TuPhat's picture

You are full of it friend.  The real divide is not by age.  Some produce much more than they consume in any age group.  Others produce little and consume a great deal and they are spread across every age group.  Any data from the IMF is worthless.  Use good sources for your info or you are going to be wrong most of the time.

Mon, 06/23/2014 - 13:12 | 4886073 NotApplicable
NotApplicable's picture

Hey, divide and conquer is hard enough work without removing valuable rhetorical tools. Especially ones based on collective aggregates.

Mon, 06/23/2014 - 08:24 | 4885018 Oldwood
Oldwood's picture

Why do people continue to try and connect the stock market to any facts or fundamentals?


No one gives a shit what the cards in your hand are worth. They are just paper after all.

Mon, 06/23/2014 - 08:48 | 4885086 forwardho
forwardho's picture

Agree, any chart drawing conclusions from pre-tarp/QE1-3 is based on faulty logic.

Once central banks began dumping trillions in liquidity into the markets it became a whole new game. Movement of markets is now caused by majic, not fundamentals.

Majic = Illusion

Mon, 06/23/2014 - 21:15 | 4887811 Abbie Normal
Abbie Normal's picture

The movement of the markets can no more be controlled by man than the coming of the seasons, despite our best efforts.  Go ahead, try to prevent winter from coming.

Mon, 06/23/2014 - 12:18 | 4885859 Jerk_Store
Jerk_Store's picture

Why do people continue to try and connect the stock market to any facts or fundamentals?

Because when you make a lucky pick, you can explain to your friends how smart you are.

Mon, 06/23/2014 - 08:24 | 4885019 Tom Brady
Tom Brady's picture

I'm sure the fed will have a ready appetite when called upon

Mon, 06/23/2014 - 08:25 | 4885021 Jason T
Jason T's picture

Better question who will they sell their defaulting bonds to?

Mon, 06/23/2014 - 10:02 | 4885336 Iriestx
Iriestx's picture

They'll nationalize any retirement accounts you have and force you, at gunpoint, to buy them.


It's for the good of the socialist utopia, citizen!

Mon, 06/23/2014 - 13:20 | 4886111 NotApplicable
NotApplicable's picture

"When markets go away
I know my bonds can stay with MyRA / it's understood
It's in the hands of MyRA / and MyRA does it good
Wo-wo-wo-wo-wo-wo / MyRA does it good"

Mon, 06/23/2014 - 13:18 | 4886100 NotApplicable
NotApplicable's picture

Defaulting bonds?

Not gonna happen.

Magic checkbook is gonna get stretched a lot more before the dollar finally breaks. The only question of when revolves around their ability to manage perceptions. As long as the herd believes "the next step" is inevitable, then they will continue to accept their fate, as TINA tells them that "There Is No Alternative."

Painting people into a corner is what governments do best. Well, other than stealing to fund it.

Mon, 06/23/2014 - 08:26 | 4885029 Hal n back
Hal n back's picture

The answer that the fed buys everything might be correct but the next question is what happens to the indentured society. We already have a govt that owns most of the mortgages and guarantees student loans.

Mon, 06/23/2014 - 08:54 | 4885108 dontgoforit
dontgoforit's picture

Remember the 'chains' uncle Joe Biden talked about?  Those chains are for us.  They desire to have all of us banging on the door begging for mercy.

Mon, 06/23/2014 - 08:28 | 4885032 buzzsaw99
buzzsaw99's picture

How safe is that bet, i.e. that central banks will be able to buy most of global stock market without any consequences or blowback?

What makes you think the fed gives a flying fig about blowback?

Mon, 06/23/2014 - 08:33 | 4885044 fonzannoon
fonzannoon's picture

It's summertime bbq and party time. This year is particularly fun. I get there and after a few mins someone says "Hey fonz is here, hey fonz how's that economic collapse coming eh? Dow at 17k eh buddy!!" The good news is I no longer bring beer as everyone thinks I am totally broke from shorting the market so I play along and drink free.

Mon, 06/23/2014 - 08:43 | 4885068 Seasmoke
Seasmoke's picture

Not a bad hedge. 

Mon, 06/23/2014 - 08:44 | 4885074 fonzannoon
fonzannoon's picture

Ha, I never looked at it that way.

Mon, 06/23/2014 - 09:08 | 4885134 buzzsaw99
buzzsaw99's picture

+1 - they say here comes poor buzzsaw in his ten year old car, he ain't down with us. here ya go buddy, have a premium beer on us since you can't afford one. i never argue. lulz

Mon, 06/23/2014 - 19:41 | 4887466 Oldwood
Oldwood's picture

At least you are still invited.

My wife says I'm too depressing.

I have to buy my own beer.

Being the official "rich Uncle" on my wife's side, I used to get a lot of them wanting to know my secret to wealth (not that I'm rich by any stretch, but relatively I'm evidently Trump when they are living in rented mobile homes). When I explain that it was and still is work that allows me to have a decent home and warn them of the need to live conservatively, taking care to not accrue debt, a tear comes to their eye and they walk away.

I'm simply fucking depressing

Mon, 06/23/2014 - 08:40 | 4885060 Yellowhoard
Yellowhoard's picture

With Gen-X and Gen-Y are out as buyers, who's l.....

Love, love, love this site, but you guys really need a full time editor.

Mon, 06/23/2014 - 08:41 | 4885066 Seasmoke
Seasmoke's picture

Sell to the public takers pensions. They don't care what they buy. They get paid either way. 

Mon, 06/23/2014 - 08:48 | 4885087 jonytk
jonytk's picture

it's all algos, hedge funds, institutional investors and pension funds making profit.

The regular guy that follows cramer bites the dust and all the millenials will be buying bitcoin. the ultimate ponzi-game to end with all others!

Mon, 06/23/2014 - 08:49 | 4885089 Quinvarius
Quinvarius's picture

The thing that sticks in the back of my mind is that the central banks let it be known that they are in the market for 29 trillion.  They didn't say it on the way up while they were buying.  They are saying it now.  It is like they are trying to get people in.  And these fkrs have a history of organizing gang rapings on behalf of their private banks.

Mon, 06/23/2014 - 09:01 | 4885122 Thought Processor
Thought Processor's picture



I agree Quin.  This reeks of another set up.

The big players are and have been exiting the casino for a long time now, though in order to do so they need to drum up increasing amounts of PR for the various markets.  

Strange world we live in.

Mon, 06/23/2014 - 08:54 | 4885107 Uncle Remus
Uncle Remus's picture

Wait - you're still in stawks?

Mon, 06/23/2014 - 09:01 | 4885118 SheepDog-One
SheepDog-One's picture

'Why not sell here, and wait for the next bottom?'

Oh no, the Boomers are far too greedy for that! Just yesterday I was talking with my parents and some of their friends who tell me it's all up from here, no downside risk even exists they're all sure of it. I suggested perhaps a top is forming here at DOW 17,000, they just looked at me like a crazy person, 'I just don't get it' they all said.

Mon, 06/23/2014 - 09:23 | 4885179 messymerry
messymerry's picture

Somebody mentioned in an earlier article here at ZH that the trigger would be around 17,500.  Seems reasonable to me...


Mon, 06/23/2014 - 12:23 | 4885872 SheepDog-One
SheepDog-One's picture

OK so a bit before July 4th then, got it.

Mon, 06/23/2014 - 17:15 | 4887055 messymerry
messymerry's picture

Hey, we won't need to buy fireworks.  Just go stand outside and watch the fun...with your AR or AK...


Mon, 06/23/2014 - 09:06 | 4885128 SheepDog-One
SheepDog-One's picture

2014-2016/ down.

Well, not seeing it yet, maybe it will start unravelling this year but I'm not holding my breath on a bunch of Central Plansters who have gone full retard.

No telling whats in store here.

Mon, 06/23/2014 - 09:13 | 4885152 buzzsaw99
buzzsaw99's picture

it could take awhile longer than 7 years since the proles aren't buying stocks with second mortgages no mo. until the bagholders show up, maybe at gunpoint, there will be no decline.

Mon, 06/23/2014 - 09:26 | 4885189 messymerry
messymerry's picture

We're not going to make it another seven years.  If you think this last recovery was slow wait till the next crash.  Personally I don't think we are going to make it to 2017 before all hell breaks loose...


Mon, 06/23/2014 - 13:23 | 4886127 NotApplicable
NotApplicable's picture

Got WAR?

Mon, 06/23/2014 - 14:12 | 4886287 moneybots
moneybots's picture

"it could take awhile longer than 7 years since the proles aren't buying stocks with second mortgages no mo. until the bagholders show up, maybe at gunpoint, there will be no decline."


The S&P has tripled and no bag holders have shown up?  With over 45 million on food stamps and 92 million not working, and College students have a trillion dollars in college loans to pay off.

Where are the bag holders supposed to show up from?

Mon, 06/23/2014 - 09:19 | 4885129 overexposed
overexposed's picture

So if both Gen-X and Gen-Y are out as buyers, who's left to buy the tens of trillions of dollars of Boomer assets at bubblicious prices? Given that other nations face the same demographic dilemma, the answer appears to be: the Federal Reserve

There, fixed that for ya.

Mon, 06/23/2014 - 09:21 | 4885173 Downtoolong
Downtoolong's picture

who's left to buy the tens of trillions of dollars of Boomer assets?

Only the uber wealthy, who are only investing money they will never need, and who mainly want to continue accumulating a larger share of everything.

They will pay any price. They don’t care how high or low it is, because, they pay with essentially free money loaned to them by the Fed which they never really have to pay back until it becomes even more worthless.

This is how the rich get richer today. This is the wealth transfer scheme which is in play and happening right now. It will only accelerate as boomers must cash out to survive.

It’s really less about supply, demand, or price and and more about power and control. As the old adage goes, Wealth flows to power, not the other way around.


Mon, 06/23/2014 - 09:21 | 4885174 Typing Typer
Typing Typer's picture

"The Greatest Generation" is going to be remembered as "The Shittiest Generation", when their debts and bubbled "assets" come raining down on everyone coming up behind them, ruining the national economy, and showing what a self-serving ponzi lie the last 80 years of US history have been all along.

Mon, 06/23/2014 - 10:08 | 4885359 libertysghost
libertysghost's picture

Very concise and spot on...I've been ringing this bell for a long time...and on its face I always ask people "can you call yourself 'the greatest' and be that with such little humility..and can you trust a generation so full of itself it displays such cognitive dissonance?"

Mon, 06/23/2014 - 13:24 | 4886134 NotApplicable
NotApplicable's picture

To which they reply: "LOL WUT?"

Mon, 06/23/2014 - 09:22 | 4885177 SirTaxedAlot
SirTaxedAlot's picture


Mon, 06/23/2014 - 09:28 | 4885201 andrewp111
andrewp111's picture

As it is right now, non-economic actors (corporate buybacks and central banks) are the biggest buyers of stocks. That will continue until such actors own everything. All stocks, all bonds, all RE, everything.

Mon, 06/23/2014 - 13:30 | 4886152 NotApplicable
NotApplicable's picture

Funny how Rothbard's theory that there is no real difference between corporate bond investors and equity investors (both seek a rate of return that tends to equalize) works in this paradigm. Corps take on more debt, buying back more shares, until someday they are wholly owned by a bank, on BOTH levels.

Sad thing is, the "demise of Capitalism" will be trumpted as the genius of Marx.

Mon, 06/23/2014 - 09:53 | 4885220 plane jain
plane jain's picture

Who can buy?

I started wondering the same thing starting out working in low paying retail/service jobs.  As in "If every company buys their products cheap from overseas, and barely pay their local employees, who can buy their products?"  That seems to be playing out more now, masked somewhat by fudged inflation measurements.  Wonder if shadowstats has done charts of various industries sales/gross revenues with more realistic inflation?

And now the wringing out of any remaining juice in this system.  The so called Greatest Generation, fading out and passing along their remaining capital to Boomer children.  The Boomers being eaten alive by biflation won't have much, if anything, to pass along to Gen X/Gen Y.  SS transfer payments are being kept low with artificially low inflation measurement while medical costs increase, food and energy costs increase, taxes increase.  And those who weren't entirely dependent on SS got hit with the market wipeout and housing crash just at retirement.  Throw in some age discrimination forcing some folks out of the workforce early too.

My spouse and I are Gen X; parents are Boomers.  His parents were small business owners/investors.  Nearly wiped out by some unfortunate outright fraud and one massively manipulated stock.  My dad did alright.  Retired with a pension around 60.  Passed at 67.  He worked a factory job and actually beat the average life expectancy after retirement from his place of employment.  I may see some small inheritance from that.  My mom is plain broke.  She worked and saved as best she could but lost a lot in the market crash, was laid off about the same time and wasn't able to find full time employment.  Had a couple of part time gigs that didn't last.  Still has a house payment that runs around $600 with insurance and taxes and trying to live on $24K a year from SS and a couple of little pensions.  Mom is plain desperate with trying to keep it together.  Her car is on its last legs, she has a couple of medical issues she need scrips for, and neither of her kids is in a position to help.  In fact my brother is doing worse than she is.

Long story shorter, looks like a dead end to me.  We either have a reset/jubilee of some type or just all get ground away.

Mon, 06/23/2014 - 10:52 | 4885515 Typing Typer
Typing Typer's picture

Well if your mom gets $24k a year, then after taxes that should be about $1500/month. With a mortgage at just $600, she still has $900 left every month. That's tons to live on if you spend it wisely. What's she spending it on? Maybe payments and interest on credit cards and loans of various sorts. Everyone needs to try hard and learn how to live without borrowing. It's not that difficult if you are willing to just defer your purchases and employ reasonable substitutes in the meantime, then buy only with cash.

It seems your mom is in a pretty good position, unless something is left out of your narrative.

Mon, 06/23/2014 - 11:53 | 4885722 plane jain
plane jain's picture

No other debt than the house AFAIK. She does use a credit card for airline miles and pays in full. 

Medicare co-insurance, co pays and meds are a fair chunk.  Type 2 diabetic w/high blood pressure.  Strong genetic component, not obese.  She has had to go without meds when she hits the so called doughnut hole. 

Utilities running $200 - $300 depending how hot it is.  No cable tv, no landline, cheap cell plan, internet, roku for tv. Insurance for an old car and gas around $4; no public transportation around.  Doesn't keep much food on hand or buy anything fancy.  

When money is really tight it is the unplanned expenses that get you.  She had a tooth break recently and it was over $400 to get it fixed.  Radiator had to be replaced on the car.  Now it needs electrical work.

She has a small dog she keeps fed and participates a couple of times a month in potlucks with her church lady group.  That and accounts with Neflix/Amazon for tv on the roku is about it for entertainment/extras.

It can almost always be worse.

Mon, 06/23/2014 - 14:16 | 4886306 Atomizer
Atomizer's picture

Wow, that reminds me of my first marriage. Dump that piece of shit. Mrs. Atomizer is the best woman I have been with. She'll still bark at you like a dog. I still get in trouble blogging on ZH while on the back Patio.

I throw salt into her wounds, tell her, do want me to wear a GPS Garment to find me in the house? She always starts laughing. Case closed. Staying out of the doghouse requires dropping whatever your doing and eat her served menu.

I'm a very lucky man. She is a iron chief cook. She has never been on TV. 




Mon, 06/23/2014 - 09:44 | 4885263 adr
adr's picture

It's pretty obvious. Who will buy all the stocks at nosebleed levels?


In other words a complete scam. But it always was.

Mon, 06/23/2014 - 09:57 | 4885317 MathWins
MathWins's picture

A question I asked when the 401k's were first started.  The Baby Boomers (and I'm one of them) are going to suck this country dry.  I keep telling the younger generation of our family they better start paying attention, because they are being screwed and they don't even realize it.  I guess they are too busy on their I-phones and Face Book accounts to pay attention.

Mon, 06/23/2014 - 10:44 | 4885500 strangeglove
strangeglove's picture

Face Fuck

See what i did there

Mon, 06/23/2014 - 12:08 | 4885817 therover
therover's picture

I told my 15 year old son that he and his friends need to get FUCK SOCIAL SECURITY T-shirts and spread the word......they need to band together and DEMAND to not have any social security dedution in their pay checks when they start to work.

They need to get into the mindset of spending less, saving more and become physically fit on their own (fuck organized sports) and CANNOT depend on the governemnt for ANYTHING.

Mon, 06/23/2014 - 12:40 | 4885913 p00k1e
p00k1e's picture

"I keep telling the younger generation ... they are being screwed and they don't even realize it.  "

What can the younger generation do, exactly?   The only answer is mass-scale euthanasia for their parents and grandparents.  

The under 55 crowd is the one who will be hit the hardest financially.  All the systems are busted.  Look to the bailout that occured. 

Mon, 06/23/2014 - 10:02 | 4885339 RiverRoad
RiverRoad's picture

The central bankers will buy it all back all right:  after they crash it, they'll buy it all back at the bottom.

Mon, 06/23/2014 - 10:39 | 4885479 I Write Code
I Write Code's picture

Apparently when the last boomer dies, the rest of America will simply stop in place and scream at the moon and live the rest of their lives scratching out grubs from the ground.

Mon, 06/23/2014 - 10:43 | 4885497 Shizzmoney
Shizzmoney's picture

Don't worry, Zuckerberg and the rest of the young joos and their start up app companies will buy up all the stawks.

And remember what the bernanke put was all about: we will save the market, at any cost.  THE NUMBERS OF THE DOW MUST RISE AT ANY COST!!!!11111

Mon, 06/23/2014 - 11:00 | 4885555 asteroids
asteroids's picture

What happens if everyone starts doing secondaries and 5:1 stock splits? Will the FED buy everything in site? What does that do to the value of the dollar?

Mon, 06/23/2014 - 11:11 | 4885600 MASTER OF UNIVERSE

Shadow Banksters can purchase the boomer's portfolios
thousands of times over. Moreover, they don't know what to do with all that money sloshing around anyways. Simply pair
the two groups together and give them an offer they can't refuse. Tell the shadow Banksters that their kids won't have a future if they don't cough up the cash. Threaten to
siphon off their assets and exile them to Calcutta, Biafra, or Detroit. Tax their portfolios so high that the Gubberment
can afford to make the boomers whole. In brief, tax them into the same hell that they wanted us to live in. If that fails one could always double tap the bastards and their families until they develop a new religion and faith in their fellow man!

Mon, 06/23/2014 - 11:26 | 4885643 MILESCFA
MILESCFA's picture

Anytime someone uses an arithmatic scale on a long term chart, they are either ignorant of math or intentionally misleading....

(  11750  / 770 ) ^ [ 1 / (01/2001-08/1982) ]

15.26 ^ [ 1 / 17.5 ]

15.26 ^ 0.057 = 1.1685     aka 16.85% annualized return


( 16566  / 6470 ) ^ [ 1 / (6/2014-3/2009) ]

2.56 ^ [ 1 / 5.25 ]

2.56 ^ 0.19 = 1.1961    aka 19.6% annualized


The market has done modestly (slightly? a bit? etc..) better during the '09-now time frame, BUT IMHO nothing like "an arithmatic" chart shows. The chart should be logrithmic.

However, I may be ignorant? I've done this math several times, but the slope of a (hand-drawn) trend line on a log scale looks steeper for '82-01 (ie, higher return). Conversely, a "regression" trend line on an arithmetic scale looks MUCH steeper for '09-now (higher return).

Any mathematicians out there?

Mon, 06/23/2014 - 11:35 | 4885672 BullyBearish
BullyBearish's picture

We'll see if the OLD TESTAMENT 7-year cycles hold up with the beginning of the reverse happening this year...BE READY!

Mon, 06/23/2014 - 12:28 | 4885885 SheepDog-One
SheepDog-One's picture

lol wut? Oh, you mean gawds runnin the central banks? I don't get it.

Mon, 06/23/2014 - 13:20 | 4886110 moneybots
moneybots's picture

"We'll see if the OLD TESTAMENT 7-year cycles hold up with the beginning of the reverse happening this year...BE READY!'


The business cycle is about 7 years.  So there is nothing new under the sun.

Mon, 06/23/2014 - 13:21 | 4886113 moneybots
moneybots's picture

"We'll see if the OLD TESTAMENT 7-year cycles hold up with the beginning of the reverse happening this year...BE READY!'


The business cycle is about 7 years.  So there is nothing new under the sun.

Mon, 06/23/2014 - 11:39 | 4885690 DR
DR's picture

I thought the plan was to sell to illegal aliens...

Mon, 06/23/2014 - 11:45 | 4885714 narnia
narnia's picture

LBO baby, just up to the point the debt service = cash flow. Convert phantom value to bad debt.  That's the game, whether the Fed is an intermediary or not.  


Mon, 06/23/2014 - 11:47 | 4885730 SethDealer
SethDealer's picture

gen xyz

Mon, 06/23/2014 - 12:00 | 4885784 roadhazard
roadhazard's picture

I suppose they will sell them back to the companies that are buying them back daily.

Mon, 06/23/2014 - 12:28 | 4885805 deflator
deflator's picture

Too risky to be short long term. I see very high inflation long term. Governments and central banks will continue to see themselves as heroes for causing inflation.

Mon, 06/23/2014 - 12:08 | 4885815 insanelysane
insanelysane's picture

I seem to remember a few years ago or maybe it was a decade ago, a government consultant came to the same conclusion but it was actually scarier.  The topic was the social security program and the fact that it isn't viable because too many boomers would be collecting versus number of people working.  This was way before the participation rate dropped precipitously.  The consultant was looking at the viability of having everyone switch from social security to the stock market.  The finding was that there would be too many boomers selling versus people in the workforce to buy stocks.  Again, this was when there was still an economy and the calculations showed this wouldn't work.  

Now it would be interesting to see the value of social security taxes being paid into the system via the service sector jobs versus how much is being paid out to the retired people that had manufacturing sector jobs.

Mon, 06/23/2014 - 12:09 | 4885824 robertocarlos
robertocarlos's picture

They will sell their stocks to the same people who buy their house. I have no idea who will buy my socks though. Probably the same person who buys my shoes.

Mon, 06/23/2014 - 12:10 | 4885829 peakoilproof
peakoilproof's picture

This article assumes that Americans have to sell their assets to other Americans. We live in a globalized world. They'll sell them to Chinese and Saudis and anyone else who has the money.

Mon, 06/23/2014 - 12:18 | 4885855 BeetleBailey
BeetleBailey's picture

FEW TO NONE of the sheeple even "got it" when Sir Larry Wildman was buying Anicott Steel ON THE WAY DOWN from Gekko...

Oliver Stone did that scene how you strangle hold and OWN something....

Even "Trading Places", with Ackroyd explaining it perfectly.....failed to dent the thickness in most brains....even after going over it slowly....

...because what is happening....Buffet gets it the old he is putting and selling quietly.....the fucker...Quicktaintlicker....

"The Greatest Generation" the WW2 crowd, is mostly dead...and IMO...NOT THEIR FAULT....

it's the fuckin BOOMERS and the cunts in banking, along with criminal government(s) that fucked things up....

Mon, 06/23/2014 - 12:54 | 4885987 ImReady
ImReady's picture

In my 45yrs I had never seen a Berkshire Hathaway Real Estate sign in the Chicago area. In the last 12mos I've noticed them popping up everywhere I look. Warren has bought homes on the cheap and is now looking for the suckers...

Mon, 06/23/2014 - 13:15 | 4886091 mtl4
mtl4's picture

Berkshire has had the HomeServices holding company since 1998 which provides "In addition to brokerage services, these real estate companies provide mortgage loan originations, title and closing services, home warranties, property and casualty insurance and other related services."  Smell a rat yet?  The fact they have been operating behind the scenes all along and only now just put their branding on it should tell you something.  Uncle Warren is up to no good again (making money on volatility is the name of the game).

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