We have entered a whole new era of creative destruction, folks. Here are a couple of paragraphs from an article in today’s Times:
The Bush administration on Saturday formally proposed to Congress what could become the largest financial bailout in United States history, requesting virtually unfettered authority for the Treasury to buy up to $700 billion in mortgage-related assets from financial institutions based in the United States. …
A $700 billion expenditure on distressed mortgage-related assets would be roughly what the country has spent in direct costs on the Iraq war and more than the Pentagon’s total yearly budget appropriation. It represents more than $2,000 for every man, woman and child in the United States.
And from the Economist:
Ten short days saw the nationalisation, failure or rescue of what was once the world’s biggest insurer, with assets of $1 trillion, two of the world’s biggest investment banks, with combined assets of another $1.5 trillion, and two giants of America’s mortgage markets, with assets of $1.8 trillion. The government of the world’s leading capitalist nation has been sucked deep into the maelstrom of its most capitalist industry. And it looks overwhelmed.
I’ve now read the Times, WSJ, the Economist and the Financial Times, and still I simply cannot get my head around what is happening. I suspect there’s a lot of people who are IN CHARGE of financial institutions and government agencies who can’t, either.
As I argue in my book Slackonomics, it could very well be up to Generation X to bring the economy back from the brink. I guess that was overly optimistic. In fact, it is going to be up to us to rebuild the economy from the ground up.
The 10th Anniversary edition of the surprise bestseller, The Not So Big House, will be published in the coming weeks. The book struck a nerve with Generation X, which embraced its emphasis of quality over quantity, Dwell-magazine practicality over McMansion bling. But I doubt Sarah Susanka (the architect and author) could have guessed just how far Gen X would take this trend.
In yesterday’s Home section of The New York Times is a story about the tiny house trend, featuring Michael Janzen. He is the epitome of an Xer who has learned how to deal with being whiplashed by the economy. In his twenties he lived in a space about the size of a two-car garage. At the age of 40, after getting married and making money as a Web designer for a bank, he has an in-ground pool, maid service, a yard landscaped with Japanese black pine bonsai trees, notes the Times. But Janzen has spent the summer building an 80-square-foot house out of free stuff he found on Craigslist. Why?
According to Mr. Janzen, he came to the realization that “I don’t want this life — the life of someone who’s working too hard to pay a large mortgage to live in this house.” The catalyst, he said, was watching the value of his home plummet with the rest of the real estate market, while the time and money required to maintain the property only increased. “The energy cost is enormous,” he said, “and the bigger your property gets, the more there is to do.”
That is Slackonomics, folks, pure and simple. Check out the article and audio slideshow below.
From the Wall Street Journal blog:
The Slacker Generation may be more charitable than the Greatest Generation.
According to a fresh survey from Northern Trust, which polled 1,000 households with investible assets of at least $1 million, Generation X millionaire households (those ages 28 to 42) gave away more money than Baby Boomers (43 to 61) or Silent Generationers (62 to 77). GenXers gave an average of $20,000 in 2006, compared with $10,000 for the older millionaire households. [DOUBLE!]
The GenXers also are more charitable in their plans for the afterlife. They expect to leave 22% of their estates to charity, compared with 16% for Boomers and 14% for Silent Generation millionaires.
The charitable goals for GenXers, however, are a little more self-centered. Fully 15% of Gen X millionaires stated that creating a lasting legacy for themselves or their family was their main goal–compared with 4% of older millionaires.
GenXers, not surprisingly, do give a bit more to global causes. Roughly 14% of the organizations receiving donations from Gen X households operate internationally, compared with 8% for Baby Boomers and 5% for Silent Generation millionaires.
Perhaps the slacker set has been misjudged. Maybe those children raised in the 1970s, amid social turmoil and growing globalism, now place greater importance on trying to solve the world’s problems. Maybe, after watching the boomers preach idealism in the 1960s and then define the “greed is good” generation of the 1980s and 1990s, the GenXers are charting their own course.
Salon has a new series of essays (two so far) called Pinched, and the first one was written by Heather Havrilesky, whose pioneering work for suck.com I featured in my book Slackonomics. Her essay is titled, “Perspire to Retire,” with the subtitle, “I was all fired up to save for the future. Then I found out I was a day late and about, um, $90,000 short.”
It is, of course, smart, witty and oh-so-Gen-Xerish. Here is just a blurb:
Toying with retirement calculators was so exquisitely painful (and such a profound waste of time) that by the next day, I had upped the stakes with college savings calculators. How much should we be saving each year to send my 12-year-old stepson and 2-year-old daughter to public, in-state universities? One thousand dollars a month, of course. (Private schools would mean saving 2K a month.) Now let’s see, let’s throw that 12K-a-year minimum in with the 93K a year we’re supposed to be saving for retirement, and what do we have? One hundred five thousand dollars a year in savings. Now tell me, who has an extra 100 G’s lying around each year, aside from some of your more enterprising rappers?
But here’s a contrarian view on the whole savings issues, as reported in The New York Times:
[Some contrarian] economists answer that people would get more out of their money by using it when they are younger. “There is risk in saving too much,” Mr. Kotlikoff said. “You could end up squandering your youth rather than your money.”
Mr. Scholz said he and his co-authors of a study, “Are Americans Saving ‘Optimally’ for Retirement?” found oversaving across all economic and education levels and most ethnic or racial groups as well. …Those who were not saving enough were usually missing their target by only a small amount.
- Perspire to Retire [Salon]
Commentary by Anne Applebaum From today’s Washington Post:
And now, ladies and gentlemen, before the convention season comes to a close, let us pause a moment and suspend our partisan impulses: It is time to sing the praises of 44-year-old women. Whether you’re a Republican or a Democrat, from Alaska or Chicago, rural or urban, a moose-hunter or a gun-controller, surely you can see that Sarah Palin and Michelle Obama, two of the stars of this year’s political conventions, do have a few important things in common.
She doesn’t use the term Generation X but that is who she’s talking about: “both of them belong to the first post-feminist generation …” Read the whole thing.
- Class of ‘64 [Washington Post}