Jun 192013
 June 19, 2013  Posted by at 6:51 pm Finance

Last week I read a few lines in a Dutch newspaper article about pensions that immediately took me back to something I wrote in early May about youth unemployment – especially in southern Europe, where it's often 50% or more -. There is a common thread that links pensions to employment to stimulus measures: the younger generations invariably get the short end of the stick. Until they don't, of course, for they have one thing going for them. Age. Before they can play that ace, however, their parents seem intent on milking them for all they got. And I can’t help finding that curious, because it’s not at all what parents say they want for their children.

The Untouchables of the 21st Century

The numbers, let's focus on Europe for now, are certain to only get worse. How do we know? Easy as pie. It's a matter of political principle. All those unemployed young people are nobody's priority but their own. They simply don't have the political might yet to swing policy decisions in their favor. That is still with the generations of their parents and grandparents, who will vote against anyone trying to cut their wages and benefits.

Sure, the week after I wrote that, there was some mumbling from the likes of Angela Merkel and Spanish PM Rajoy to the extent that "something must be done", but nothing was, it was lip service only, and there are still exactly zero actual proposals to "do something".

People who are in power will do almost anything to hold on to it. That includes politicians, bankers, corporate executives. We can all identify those groups, and we love to rage against them. But political power in our societies is also defined by age. In that the young have very little of it, and the older have a death grip.

[..] … until recently there was the prospect of going out and getting as much as, or more than, one's parents have (a better life for my children). That prospect is now gone. But people are slow to realize and accept that. They'd rather believe otherwise, and there are scores of politicians and media willing to keep that faith alive. After all, their own livelihoods depend on it.

Unfortunately for our children, our believing it just about literally means we throw them away with the bathwater. And that can of course only spell trouble down the road. Unless we create all those millions of jobs for them. But we're not even trying: our politicians are busy only keeping us from blowing our gaskets over budget cuts and tax raises; they don't care about our children, because they're not the ones voting them in power. This is not a road to nowhere, it's a road to surefire mayhem.

If we wish to understand what's happening here, we can't just blame our politicians or corporate cultures, we need to look first and foremost at ourselves. We all hold on to what we think is ours, without thinking about the consequences for younger generations, urged on by politicians who are aware that it's not our children that decide the next elections, but who strive to make US happy instead, to secure their grip on power.

What happens with pensions is the same as what happens with unemployment. And with the economy in general, for that matter: all the stimulus measures are mere lipstick for zombies, which are kept undead with trillions upon trillions of dollars borrowed from the future. We reap the undead profit and leave our children with the bill.

Here's a translated abstract of that Dutch article in the NRC newspaper:

Dutch society – like many European ones – used to offer employees a – largely paid – early retirement option. That went off the table early in the new millennium. To compensate those over 50 who were now no longer eligible for the option, but had been paying into an early retirement fund, the government set up a transition fund that allowed them to build up extra pension rights (i.e. extra money when they reach 65 – or perhaps 67 these days?! -). The younger also pay into this transition fund, but they will at best get only a fraction of that back. There was an earlier court case about this in 2006.

Today's government wants to cut the amount the state contributes, through tax breaks, to pension savings funds. This hits the younger generation harder than the older, who've already built up more (about 25 years more) of their pensions under the more advantageous system. And that's not all: new plans aim to spare the over-50 from the disadvantages of the newly introduced system, which means the younger get to pay even more.

The 2006 court case offered some numbers. Over the duration of the transition fund's existence, a – then – 54-year old would pay 33% of a year's salary in premiums, and get 75% of that salary in return. A 34-year old, on the other hand, would pay in 67% of the same salary, and receive 20% of it – in a best case scenario.

The conditions for the 50+-year old were part of a "Collective Labor Agreement", which is to say if the government would want to change them, everything would have to be renegotiated. Since we're 7 years on now, the 54-year old is 61, the 34-year-old is now 41, and there's a whole new generation coming into the active economy for whom any new agreements will be even less beneficial than for those who were their age in 2006.

Meanwhile, quite a few Dutch pension funds have lowered their pay-outs, something they must do by law if their coverage levels fall below 105%. Since people keep on convincing themselves that the economy is getting better (look at the stock markets), coverage levels have risen and cuts in pay-outs have subsided. But because this has largely been achieved by moving funds into riskier assets, the whole thing could well backfire with a vengeance (I'd say that's a given).

Moreover, because all pension plans are in their very nature pyramid Ponzi schemes that must necessarily break down when the numbers of new applicants decrease, things don't look good at all for young people, even provided they're lucky enough to find a job. They'll be required to pay ever more in premiums for the prospect of ever fewer pay-outs 30 or 40 years from now.

Those who are now over 40 are only just moving into the "political power block". Those under 40 will see their interests continue to be trampled upon for years to come. That is to say, unless they force an overhaul of the systems that deny them the fruits of their labor.

Obviously, some people will look at the older generation and say: they worked hard all their lives, you can't take away from them what they built up through the years. And that makes sense, but only in a narrowish sort of way. If there is simply less to go around than everybody hoped/thought/fooled themselves into thinking there was, something must be taken away from someone. And why must that be the young?

The Dutch example is interesting because, never mind the exact details, there’s no doubt it can be regarded as a blueprint for all of the rich world's pensions funds and systems, and ongoing and upcoming discussions, negotiations and binding laws concerning them. All rich and allegedly democratic countries have similar power structures, in which a certain group of people quite literally rule the day (often for years). The older generation will refuse to give up what they have come to believe is theirs, and they have the political clout to support their demands.

I think it was Jay Hanson who said that a democracy can only function until people figure out they can vote themselves an ever larger piece of the pie. And even if he meant it as a general observation, it's true in this narrower sense as well. A 51% majority can vote itself a lot of goodies while denying the other 49% a lot of their basics. Nor does it stop there: lots of disillusioned young people don't vote, leaving the coast even clearer for their parents to rob them.

Should they then vote? It's not much use, is it? There's not enough of them. Through advances in medicine, the older part of the population grows faster than the younger ones. They can't win.

Should we tell them they have their entire lives ahead of them and they can work to make their dreams come true? Should we do that while we refuse to create jobs for them, as the Europeans do?

For many of today's younger people there are no jobs, and for most of those who do find jobs there will be no pensions. And the cherry on the cake is they are the generation that will be burdened with paying for the stimulus measures that are handed out to the world of finance today so it can keep its losses hidden and still live in style, just to make sure the sweet lives of older generations can go on a little longer.

If you're young, this is what your folks do to you. If you're older, this is what you do to your kids. I know I present it all in black and white, but that doesn't mean it's less true, it just makes the edges a bit sharper. The fact remains that we're busily and blindly running into the mother of all generational conflicts. Which in the end the young always win.

Of course you can also put all your hope and faith on your kids and their economies growing their way out of the predicament you have created for them, but can you really use mere belief to stopgap all your problems? People who grew up in the 1960's and 70's lived through the richest times the world has ever seen. It's all been downhill from there; we may have a zillion more gadgets and trinkets in our homes, but we pay through the teeth for what was a given back in those days, schooling, health care etc. Which are increasingly becoming unaffordable even with all mothers in the labor market. We're essentially been running to stand still for 40-odd years. And we're losing.

You had a good run guys, but none of it was ever your birthright. And sure, you may be fine, and even your kids may have nice jobs, but the same is not true for an increasing number of people around you. Maybe you should spare that a thought. You know, start counting.

If you're interested in more than just tomorrow, or more than a short-term profit, thinking about this is a lot more important for your future than anything Ben Bernanke says or doesn't say. In comparison, he's just a big hollow load of Kabuki. Mr. Bernanke couldn't find solutions to problems such as these if there were ten of him; his job is to hand your money, and your childrens', to a bunch of gambling addicts, and hope you don't notice. He's almost gone, and you haven't. Just remember: gullibility is not on your list of birthrights either.

Photo top: Dorothea Lange Following the Cotton June 1937
"Child of Texas migrant family who follow the cotton crop from Corpus Christi to the Panhandle."


Home Forums Why And How The Young Are Screwed

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    Last week I read a few lines in a Dutch newspaper article about pensions that immediately took me back to something I wrote in early May about youth u
    [See the full post at: Why And How The Young Are Screwed]


    Has Jay Hanson actually ever seen the mythical creature chomping grass in real life, or he simply read about it in some dead dude’s story book?


    Ben said,”No interest raises in the foreseeable future.”

    Grandma has not got it easy either with the kids and the grandkids sleeping on the couch.

    Ben is still humping her savings.

    The money managers are still skimming bonuses and Ben has had to print $3T to cover the short fall, ( and counting).

    World wide, I read, that there has been $17T printed to cover the skimming taken by money managers.

    I don’t blame the boomers. They never learned math.
    I blame those who took the money for their own benefits.

    WHO has all the money?


    I don’t understand you always seem to allude that everything is off into the distant future and that the older generation has got it made…but I see things crashing and no one will be spared…there will be no safe place to hide money….if the “system” fails pensions won’t be safe either…nor will 401k’s.

    TAE Summary

    Screwing the Young

    The young will get the short end of the stick
    Until they manage to amass some power
    Their day will come when oldster all get sick
    Their star will rise as boomer prospects sour

    The powers that be say something must be done
    But this lip service doesn’t yield results
    They sacrifice my daughter and your son
    To keep their power; Their hubris revults

    We all hold on to what is in our hands
    Despite the consequences for the young
    And when our wealth slips through like transient sands
    Our innocents atone by being hung

    The aged beggar youth. Can we not ban it?
    Lest heartless fossils vote youth off the planet


    Nice. Stoke the fires of identity politics, when class and inequity are the real foes. If the rising tide of inequity between global elites and the rest of the vast unwashed weren’t happening, this wouldn’t be an issue. The elites thank you for obscuring the issue and helping to break down the social compact that has held humanity together for eons. The adults respect the youth, for they are the future, and they respect the aged, for they are the wisdom and they changed your stinkin’ diapers. Driving a wedge between the youth and elders is a common meme today, but let me be frank.

    I got a degree in Chemistry and could have easily taken a job in the private sector, but I elected a job in government, because I saw the writing on the wall of how the ruling class was eviserating and eliminating private sector pensions (which were common up until the Reagan era). Now here I am with savings and no debt, but I can’t get a dime for interest, because of ZIRP, and I’m sure as hell not getting into a rigged market, but you sit there and envy my pittance of a pension and ask me to reduce or do without that? Meanwhile, private jet sales are up, up, up. To hell with that. A deal is a deal. I don’t give a whit which politician was pandering to what demographic for votes in their miscalculations. You are asking to overlook the rule of law, thus you are no better than than the vermin in the FIRE industries that produce nothing and have driven this ship onto a reef.

    Your piece misses the point entirely. You ask “If there is simply less to go around than everybody hoped/thought/fooled themselves into thinking there was, something must be taken away from someone. And why must that be the young?” It shouldn’t be the young. It should be the 1%. Period. End of Story. Apparently you prefer to go after grandma and grandpa, rather than those with real power.

    BTW I have no children and am glad I didn’t feel compelled to produce progeny, bringing them onto this dying planet. I won’t have anyone to lean on later, and I don’t plan to be a burden on society, but I will be if misguided screeds like this encourage austerity with no accountability among the ruling class.


    Mark T

    Canadian readers of this blog may be interested in the following post:

    One of these days we in Canada really should have an adult conversation about the total government (federal, provincial, and municipal), business, and household debt that is being built up in this country.

    The following statistics are taken from a credit market summary data table released yesterday by Statistics Canada: (The link to this data table is at the end of my post.)

    The total debt outstanding in Canada at the end of March 2013 (bottom line of the data table) was $5.33 Trillion. From the end of March 2012 to the end of March 2013 the total debt outstanding in Canada increased by $323 Billion. For that 365 day period the total debt outstanding in Canada increased at a rate of $885 Million per day.

    From the end of December 2012 to the end of March 2013 the total debt outstanding in Canada (bottom line of the data table) increased by $90 Billion. For that 90 day period the total debt outstanding in Canada increased at a rate of $1 Billion per day.



    green–I’m not sure why you posted a link to Chris Hedges article. He criticizes the corporate-military-industrial structure, especially their assault on the environment. It is their ill gotten gains that are propping up your pension, temporarily.

    As the article points out, when you’re done borrowing and spending all the savings of the living, you borrow from the not yet born. When you’re done borrowing American’s savings, you borrow the savings of the rest of the world.

    It’s over, man. A trillion was shoved up Saddam’s rear end, a trillion in Afghanistan. A trillion here and a trillion there. All the world’s savings have been used up. It’s nothing personal against you. There’s no savings left to fund a pension system.


    Mark T,

    Increase in debt by $30 per person per day seems a lot.

    I did a quick check on Excel and it seems the greatest increase for the last published quarter was “domestic financial institutions short-term paper” at 15%. By contrast, the biggest important drop was “domestic financial institutions non-mortgage loans” at -6%. I don’t know what that means or signifies.


    Well Green you sound like you got it all figured out…..why should “we” take care of you when you are older when “we” are starving. This is the whole point that I think people don’t understand when the system crashes you won’t be sitting in an ivory tower and it won’t matter how many guns etc you have you won’t be an better off than someone with a mortgage and other debt…You are just buying yourself more time. People need to realize we are all in this together not I got mine stay away…I would rather die a free man than a rat in a hole….


    Well, Greenfire, what I read in your comment is that you want your pension, even knowing the younger generation, whose own chances of ever getting a pension like the one you want are fast approaching zero, have to pay for it. Fair enough in itself, a choice you make.

    Your reasoning is that it’s not the generational drift that wreaks the havoc here (though that by itself doesn’t get the young any closer to getting their pension). In your view, what stands in their way is not the older generation, but the 1%. You want, as far as I can see, for the younger generation to fight the 1% for what’s theirs (a pension, for starters).

    My issue with that is that it was your generation that, while building up their pensions (and their homes), allowed that 1% the money and power they have acquired.

    And I’m wondering: how is that fair? The older generation have set up things nicely for both themselves and the 1%, and leave the young hung out to dry. If you try to put yourself in their shoes, what would you say they should do?


    Everyone looks at this situation like there is going to be a floor….when the bottom drops out that is it…it is like a Jewish person in Germany 1928 buying land to protect themselves from changing times, well that was a bad move because the dynamics changed so dramatically that the bottom was gone….here is an interview with Kyle Bass and I think he gets it he just thinks he will be playing the same game with an advantage..when there is massive destabilization you are not playing with the same rules or in the same game..https://www.youtube.com/watch?feature=player_detailpage&v=gJfvLADP3HE#t=1493s


    I agree that the youth of today are completely screwed. However, it is not clear to me that it would help the youth if people with pensions/paycheques should simply refuse them. With all of the “excess claims” I’m not sure that this money would end up where it should. I’m also thinking that there would be such a miniscule number of people who would agree to do this, because of high debt levels, that it would make no difference. I agree that this is setting up for a huge intergenerational fight, but I don’t see a way around that.

    What should the youth do? I really don’t know. Nicole seems to suggest a few things ( don’t get into debt, don’t buy a house, acquire useful skills (ie carpenter), don’t acquire an expensive education or education leading to a job based on continuation of our highly complex society).

    What should the older generation do? I don’t have an answer to this either. Again, I think Nicole suggests some similar things to what is suggested for youth (ie stay out of debt and don’t own a mortgaged house). As long as people are somehow preparing for collapse and intending to help those in their community, I think Nicole would see the continued acceptance of a paycheque of some sort (including a pension?) as being a transfer of wealth from the 1% to the 99%. She has also said at one of her presentations that living in the current economy is quite expensive, such that my sense was that she was not advocating “dropping out” and leaving one’s day job as it were.

    I am personally trying to interest the youth in my sphere to come along for the ride to explore the old world of living off of the land, an activity that we have made some progress on. However, there are no takers even among those who are somewhat marginalized in the current economy.


    Hi Folks,

    If anyone doubts that the ‘parents’ did not have a choice, they should take a look at this by Tim ‘Mac’ Macartney ‘A Line in the Sand’:


    Its not all up to the young people!

    And as for the children:


    On the ‘Children’s Fire’ –

    “No law, no power of any kind shall be allowed to harm the children!”

    The fact is that

    “…we have pissed on the children’s fire”.

    Why am I here? Is a question that we should all ask ourselves often. Many do not know, this is why they do not know what they are doing. What do you value? What has real value and not just a price? People horde money and possessions, thinking they have value. This happens because they do not know what they are doing. They allow a thousand women and children to die in a building collapse in India to save a few pennies on clothes. Do you think that would happen if they knew what they were doing?

    If your value system is corrupted, or worse still is non-existent, then how can you know, ever, what you are doing? Whether it is right or wrong? Most people today are mad; they have the wrong set of values and insanely cling to them – status, power, control and wealth. These are not true values, these are objects of desire and greed. True values are about caring; they are about Love, Compassion, Beauty and Truth. And you cannot charge for them because they are free.

    We have a simple choice. Chose to live the right way to live upon this earth, or chose to die.



    Hi Folks,

    For those interested in giving feedback on how the site ‘looks and feels’ please go to this thread:

    TAE 3.0: What do you want to see?





    The unspoken premise here is that the growth economy based on fossil fuels is somehow right and proper, but it is not, as you well know from other pieces you have written. There has been a long period of easy wealth. No one here today who is at all responsible for the economic system of today. Almost all economic theory is special pleading designed to justify the position of the wealthy. Setting child against parent is not helpful. The parent should have been earning much more years ago, but instead was bought off by the promise of a pension. But that is too simple a statement of the problem. You have done better.

    But I was in a blue funk over what is happening in Egypt, and you roused me to respond, which is good.


    Sixty-Four Arrested at ‘Moral Monday’ Abortion Access Protest in North Carolina

    For the past two months, activists in North Carolina have been protesting a bill that could limit abortion access, and more than 700 people have been arrested in the weekly “Moral Monday” protests against the state’s first Republican-led government in more than a century. This Monday, 2,000 people flooded the state capitol in Raleigh, and sixty-four protesters were arrested after refusing to leave the legislative chambers.

    Stay focused.
    Important diversions tactics are in play.

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