The Boomers are Just as Bad "Over There"

In a recent speech to his country, Generation Xer and pragmatic Prime Minister, David Cameron warned his citizens about their spending and consumptive ways.  It appears that the British Boomers are no better than their American counterparts.

In Cameron's speech, he pointed out that Britain's budget deficit is more than 11%.  He went on to say that Britain currently owes $1.12 trillion (U.S. dollars) and in five years will owe nearly double if nothing is done now. 

According to the New York Times, Britain spends as much on interest payments as they spend on education.

While hearing a politician not only speak the truth about his country's situation but berating the improper spending habits of its citizens is beyond impressive.  Although Cameron will most definitely face an uphill battle.  With Boomers still in charge of Britain, Cameron will have a difficult time making the necessary cuts to reduce the deficit since I am sure that British Boomers have the same dislike of sacrifice and pain as their American brothering.

On a positive note, I may have an opportunity to start a new blog called Britain's Worst Generation.

The Most Debt Ridden Generation

It is no secret that the United States has a debt problem.  According to the CIA World Factbook, the United States government leads all debtor nations with over 12 billion dollars of debt.  And, an even more disturbing figure comes from Federal Reserve Bank of San Francisco (FRBSF).  According to the FRBSF, the United States personal debt rose to 133% of income in 2007 up from 65% in the 1980's.  This means that today, the citizens of the United States are spending 33% more than they actually earn.  The major reasons given by FRBSF for such an increase in debt stem from real estate speculation and consumer spending.

To make matters worse and to no one's surprise, the savings rate has also dropped considerably in recent years.  According to a McKinsey Global Institute study published in June of 2008, the Boomers savings rate has reduced dramatically compared to the previous generation of Americans.  The Silent Generation, born from 1925 to 1944 savings peaked at about 30% while the early Boomers born from 1945 to 1954 only peaked at 20%.  The later born Boomers born from 1955 to 1964 saving rate only peaked at 10%.  Based on their study, McKinsey concluded the following:"Our analysis shows that the Boomers' missing savings peak accounts for most of the collapse in the U.S. household savings rate from its peak of over 10 percent in the mid 1980's to around 2% today." 

An even more daunting statistic regarding savings comes from the Hoover Institution at Stanford University.  In 2005, the savings rate in the United States went into negative numbers.  Now, this is not unprecedented.  In 1933, the United States also had a negative savings rate.  The difference is that in 2005, the United States was in the middle of a great "Boom" and in 1933, the United States was in the worst part of the Great Depression. 

With the lowest savings rate since 1933 and the highest personal debt ratio in U.S. history, it seems pretty obvious that the Baby Boom generation is not only the most debt ridden generation ever but financially incompetent as well.  With no foresight to save during a boom and no preparation for retirement, the Baby Boom generation has placed the United States in a very precarious position.  With Boomers having no money to live off of, how will the country afford to take care of the older Boomer generation?