Seeking Alpha

Fitch warns that the "age bomb" in developed countries, including the U.S., will exacerbate...

Fitch warns that the "age bomb" in developed countries, including the U.S., will exacerbate indebtedness and could hurt credit ratings unless governments enact labor and pension reforms. European countries are particularly at risk, although "recent reforms in Portugal, Italy and Greece have effectively neutralized the long-term impact of aging on public finances." (Fitch report)
Comments (27)
  • "Fitch warns that the 'age bomb' in developed countries, including the U.S., will exacerbate indebtedness and could hurt credit ratings unless governments enact labor and pension reforms."


    All the folks raised on "The Population Bomb" who did the "proper" thing and restricted their procreation are now facing retirement and wondering who is going to chip into the pension pot.


    Fitch is joining the party a little late. It's curious that they focus only on how "governments (should) enact labor and pension reforms." Indeed. There's little chance of that happening. Just ask Paul Ryan.


    What's curious to me is why they don't promote the obvious?: Have more "unsafe" sex.


    "Why do all those people who do so many things "for the children" never want to have many children?"
    -- Yogi Erhlich
    21 Jan 2013, 08:51 AM Reply Like
  • Senior care REITs, healthcare stocks, for the macro.
    21 Jan 2013, 08:51 AM Reply Like
  • Even China is now rethinking its one-child policy, as they are starting to experience the beginnings of a labor shortage.
    21 Jan 2013, 09:18 AM Reply Like
  • But Biden and Hillary admire the policy.
    21 Jan 2013, 03:20 PM Reply Like
  • I don't see what the problem is. We are told daily that Americans are flush with cash and have never been wealthier.


    I mean doesn't anyone see the Prudential commercials on TV that claim 10,000 people are retiring everyday??


    You know, world travel, expensive meals, golf everyday, untold wealth that eventually be passed on to their kids........?


    Golly gee whats the worry?


    Sarcasm off.
    21 Jan 2013, 09:22 AM Reply Like
  • We are going to drive the gravy train off the cliff. Serious pension reform ain't gonna happen and with voter participation at less than 40% either the electorate does not care or does not know about the extent of the problem. CA and IL are racing each other to have the honors in driving this train off the cliff.


    Russia has a flat tax. Who woulda thunk?
    21 Jan 2013, 09:55 AM Reply Like
  • age bomb = vote bomb
    21 Jan 2013, 10:19 AM Reply Like
  • Aging population and aging politicians; quite the interesting evolution.
    21 Jan 2013, 06:06 PM Reply Like
  • Every generation somehow believes it's the last to enjoy prosperity, or is, at least, told so. And, those that buy into such arguments are foolish, both philosophically and from an investment perspective.
    21 Jan 2013, 11:02 AM Reply Like
  • At least one generation of Romans would beg to differ. Just for instance.
    21 Jan 2013, 11:08 AM Reply Like
  • JG:


    The "demise" of the Roman Empire occurred over 400 years. The problem is that some read alarmist articles and conclude that changes will occur next week and invest accordingly. They simply sabotage themselves.
    21 Jan 2013, 11:13 AM Reply Like
  • Tack:
    Absolutely agree. What IS scary is that the US is following in the Roman's footsteps to a tee, on every level.


    The collapse of the US will occur sooner than the Romans due to exponential expansion of everything from culture to technology. It will not take 400 years. My guess is 200 years. We are only in year 17 of the collapse.


    Being 48 myself means that I probably will not live to see it. My kids "might" be around though I think it will be their children that end up bearing the brunt of the end.


    I only hope that the lessons I teach them now, they will pass on to their kids to aid them in those troubling times ahead.


    Most American pass nothing on to their children and if this current cultural situation is any indication of what might get passed on in the future, the most those kids will get out of it is:


    *Where to line up for your monthly handout.
    *Where to find the best place for a cheap tattoo.
    *Which reality TV show out of 500 reality TV shows is the best.
    *How to disregard and willingly give up your rights and freedoms.
    *Become experts at blaming everyone else for ones troubles should it not work out the way they have been "promised" it would work out.
    21 Jan 2013, 11:32 AM Reply Like
  • Tack


    So why not invest capital in the ascending empires and get out of the descending empire?


    With globalization a country like the US could hit the dumper in very short order.


    However an interesting point is that globalization can also instill discipline by punishing the country much faster and making it mend its ways. We have been good at giving advice to everyone. Now we will see if we can take it.


    The net of all this is that it does not really matter if the US is a good place to invest. There are better choices outside the US.
    21 Jan 2013, 12:03 PM Reply Like
  • agreed
    21 Jan 2013, 12:21 PM Reply Like
  • TVP:


    First off, I never invest, anywhere, in "empires" or even countries. I invest in business enterprises, and they may be situated in one place or another or many places. Much dialogue is seen here in SA, talking about politics and the path of society, but it really doesn't have all that much effect unless a company is locally based with local business. The world is ever expanding.


    As for so-called emerging economies, one must still exercise caution because, like it or not, when the U.S. (or other top economies) catch cold, the emerging markets get the flu. So often, it's been claimed that various emerging markets would just bound along, oblivious to what happens here, and it's always universally wrong. Such claims were only recently made about China and Brazil during the 2008 affair, and their business and markets tanked right along with everybody else.


    Again, think people's wants and needs and business enterprises, not geopolitical units.
    21 Jan 2013, 12:28 PM Reply Like
  • Don't think you will have to wait 200 years . All empires come and go. The American empire rise was the fastest of all empires I also think its fall will follow the same path like all things American we do em bigger and faster than anyone else. I also don't think most will see it coming anymore more than Romans who thought nobody could ever take the eternal city. They did, easily too .


    I recall both the WH budget office and the congressional one saying in April 08 the path we were on back then was not sustainable,fast forward here were are, same path. However take what the situation gives you. Ben Bernanke has said he will do anything. I believe him; they all are.If they have to make it up as they go along, no problem. They have proven they will do and say anything to prop it all up over and over Till then make the most of it. Not disagreeing with you at all if the foundation is sand don't matter how smart the engineers are the house will eventually fall; all they can do is buy time but who knows how long that is for. You cant solve a debt problem with more debt, just buy time with it unless they come up with some earthshaking inventions or something .
    21 Jan 2013, 12:52 PM Reply Like
  • Like what?
    21 Jan 2013, 02:13 PM Reply Like
  • Tack


    I will summarize.


    Growth wins over the medium and long term. Got to pick your spots but growth has great rewards.
    21 Jan 2013, 02:19 PM Reply Like
  • Tack,
    I'm not sure I'd agree that businesses in China, Thailand, Singapore tanked. Rather I'd say they caught a cold. Which IMO shows the slow change that is taking place in the world.


    But beyond that, there is a confidence and energy (at least in Thailand and S Korea - I can't speak to China and Brazil) that used to be present in the USA until the early 2000's.


    Now I'm not saying no one in the USA is confident nor has energy. But I would say its not something that permeates throughout our society. And that leads to less economic risk, less growth through the years, and it becomes self perpetuating.


    So when deciding where to invest I'd tend to agree with TVP in the macro sense. Having said that, there is opportunity everywhere and we're more likely to make good investment decisions on things that we have more immediate knowledge of and can experience. So even though I'd love to own a bunch of small and mid-sized companies overseas, I rarely get enough true information to make that type of decision.


    As for the article itself, its not an age bomb - its a government dependency bomb. SS can work itself out as far as I'm concerned. Benefits would just slowly lessen as the years go on and less money is available. We should do the same with public pensions - folks want to make believe they only have to contribute 2 or 4% and the pension will get 8.5% returns - be my guest - but accept its not reality and just pay them less when the pension fund is short. We need to remove the taxpayer as the guaranteer of lifestyles.


    Until we restore the core principle that government exists to do only what its not reasonable for the individual to do - we will continue to enlarge government, lessen liberties and freedoms, reduce our children and granchildren's future opportunities, and watch our competitors continue to catch up.


    The size and scope of our government is the bomb. Liberty and Freedom are the casualties, and the economic opportunities and growth follow.
    21 Jan 2013, 02:40 PM Reply Like
  • In other words, typical democrats (like few who cries for contraceptives and defined it as a stronghold womens right )
    21 Jan 2013, 02:51 PM Reply Like
  • Completely agree. There are some goods choices over the very long term for investments, many of which are not solely dependent upon the path of the US economy.
    21 Jan 2013, 06:08 PM Reply Like
  • So 'bomb' is our new scare word for 2013?
    Meh, this is going to give the FBI algorithms fits as it scans communications.
    'gate', 'cliff', 'bomb' what-ever.
    21 Jan 2013, 11:37 AM Reply Like
  • I know when a Warren Buffet aka the oracle says yesterday that the size of federal deficit doesn't matter anymore when I watched the same oracle last fall at the Feds retreat in Jackson Hole flanked by Simpson and Bowles praising the need and urgency to adopt Simpson Bowles something ain't right as they say down South
    21 Jan 2013, 12:30 PM Reply Like
  • Man speak with forked tongue.
    21 Jan 2013, 02:18 PM Reply Like
  • @Tony Petroski
    It is funny, you mentioned not enough procreation as the problem. The thoughts that would go through my mind repeatedly (when I switch my thoughts to being an Indian in my previous life) as I go through some of the so called developed countries is that "Lesser population enjoying the fruits of a vast and fertile land, like Canada for example, and the power of lesser labor pool". It seems India went from 100 million to 1.2 trillion in the last 100 years and what made them to procreate so much so fast? Besides the known facts, the students will joke that some of them can make a woman instant nine month pregnant by the way they stare at them. If we can find a way to make instant 21 year old kids all our problems will be solved (well, I guess we call that the immigration visa and we exhausted that route too as the first generation immigrants paid into the ponzi scheme without their parents collecting any and now wants to collect some for themselves). So, procreate or not, you are going to have problem, it seems!
    21 Jan 2013, 08:02 PM Reply Like
  • Mr. Ohrama. If you read my screed carefully (no reason you should) you'll notice that I was finding it funny that Fitch did not give as a reason for their concern (in so many words) that the "Americans are having too much protected sex."


    Actually, I didn't find it funny at all--that's why my screed was funny. Fitch is a political-correctness factory like so many of our "institutions," and they could be expected to do their job while toeing the party line. You as an ex-Indian will recognize that party line--it's called socialism.


    I myself advanced no opinion on the subject other than to note that as people have fewer and fewer children they seem to get more and more concerned about them.


    "If you have to explain the joke, it ain't funny."
    -- Out-of-work commedian
    21 Jan 2013, 08:15 PM Reply Like
  • People with no children to fuss over turn and fuss over everyone else.


    Having said that government should get out of vagina and penis policies and let the chips fall where they may. Darwin wisdom would indicate the most likely to procreate would do so and survive thereby making the world a better place.


    Or if you believe in God then it is just His will.


    Either way let's get rolling.
    26 Jan 2013, 04:00 PM Reply Like
DJIA (DIA) S&P 500 (SPY)