The opinions expressed by columnists are their own and do not represent our advertisers

Tuesday, January 31, 2012

How To Prepare For The Coming Global "Write Off" On Social Programs And Government Outlays

The coming years will be marked by a seismic change in the economic landscape in the US. Firstly and most importantly, we are going to see economic growth slow down dramatically. Jeremy Grantham, an asset manager I respect, believes we’ll see global growth at 2% over the next seven years. Personally I believe it could be even lower than that.

The reasons for this slow down are myriad but the most important are:

Age demographics: a growing percentage of the population will be retiring while fewer younger people are entering the workforce.
Excessive debt overhang.
A return to more frugal “common sense” spending patterns in the developed world.
Political and Geopolitical uncertainty.

Regarding #1, Europe is the most glaring situation. According to Eurostat, between 2004 and 2050, the number of people of non-working age relative to those of working age will increase dramatically. In the EU in 2004 there were approximately four people of working age (19-64) for every person of non-working age (65 and older). By 2050, this number will have dropped to only two people of working age for every person of non-working age.

Over the same time period, Europe will also see a tripling in people considered to be “elderly” (80 or older) from 18 million to 50 million.


1 comment:

Anonymous said...

Has anyone ever thought about if the country did go bankrupt what would happen?A lot of people seem to thing this can never happen.