2010 August 22 Sunday
Tony Robbins Economic Warning

Tony trains each rich and powerful people that my guess is he's fairly well connected at this point. So worth listening to. Tony sees a big market dip on the horizon.

Tony makes the accurate point that has the Baby Boomers move thru their lives at different stages their earning, spending, and investment patterns change. Edward Yardeni famously called the 1990s bull market based on the stage of life of the Baby Boomers. Tony is right about that. The Boomers are downshifting on housing and other forms of spending heading into retirement. That big shift is coming on top of the end of the housing bubble (and the housing bubble was partly caused by Baby Boomer stages of life in the first place). So housing demand looks set to stay low. Great news for buyers btw. Lower prices are good for buyers.

Tony brings an upbeat attitude to the possibility of another economic dip.

We face a long term financial crisis. Check out this Bloomberg News opinion piece by Laurence Kotlikoff who explains just how financially f**ked Americans are.

Based on the CBO’s data, I calculate a fiscal gap of $202 trillion, which is more than 15 times the official debt. This gargantuan discrepancy between our “official” debt and our actual net indebtedness isn’t surprising. It reflects what economists call the labeling problem. Congress has been very careful over the years to label most of its liabilities “unofficial” to keep them off the books and far in the future.

Cuts in old age retirement programs will cause people to spend less and save more. This will depress demand further. Kotlikoff expects benefit cuts.

Mr. Kotlikoff’s calculations looked at how a couple’s spending and saving patterns might have to change if the government raised the full retirement age to 70 (we assumed it was imposed right away, though such a change would probably be phased in over many years). That would essentially translate to a 19 percent cut in monthly benefits, according to Mr. Kotlikoff. He performed the calculations using his company’s retirement planning software, ESPlanner, which shows what people need to save to ensure a consistent standard of living over the course of their lives.

Can other parts of the world basically decouple from the US while the US economically stagnates for several years? What are the global implications for the American economy's problems?

Update Steven Abrahams, an analyst at Deutsche Bank AG, says real estate prices in the US will fall another 5% in 2011 and a third to a half of all mortgages will be underwater. That's an amazing claim. How vulnerable are the big banks to a more defaults?

Share |      By Randall Parker at 2010 August 22 08:42 AM  Economics Demographic

no said at August 22, 2010 8:34 PM:

This guy sounds dangerous to me.
He says a lot of good things, but mixes in a few stupid ideas such as "the economy is based on spending and consumption"..

If you want some real sense watch these Peter Schiff videos.

Peter Schiff was right - Mortgage Bankers edition (Highlights) (2006)

(I know a lot of people have already seen them, but they are still pertinent)

no said at August 22, 2010 8:55 PM:

Here is a good one, the guys are laughing, it is and was so obvious.

The 2009 Henry Hazlitt Memorial Lecture, presented by Peter Schiff:

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