My buddy Mike from Crime & Federalism, unrepentant Gen-Y slacker that he is, blames us baby boomers for a precipitous decline in his 401(k). He calls us “old guys,” as if he’s not going to need Geritol some day.
But there’s also Tom Friedman’s vision of the problem.
Just like the dot-comers in the 1990s, the financial stocks got inflated to ridiculous levels and salaries for Wall Street executives reached ridiculous heights. You are now watching live and in color that bubble burst: “Thank you for playing, Lehman Brothers.” That’s really sad for a 158-year-old company.
The market is now consolidating this industry, with the strong eating the weak, which will impose its own fiscal discipline. Good. Maybe then more of our next generation of math geniuses will think about going into engineering the next great global industry — energy technology — rather engineering derivatives.
Greed knows no age. Greed only knows that there has to be some way to make more money, whether in good times or bad.
This time around, the bubble came in the form of subprime mortgages to purchase overpriced housing with no money down. And who was doing the buying, Mike? Not us boomers. We already own homes, which we purchased for 20% down with a fixed rate mortgage. If anything, we were selling, not buying. We’re ready to downsize. No need for these extra rooms now that the chickens have left the roost. Unless, of course, they came back after college so mommy could continue to wash their clothing and cook them breakfast.
But as the housing market collapsed, and people couldn’t cover their mortgages or sell their houses, the bonds lost value and, therefore, the banks that held them lost capital, and the whole pyramid started to crumble. This infected the entire housing market, so banks no longer knew the value of their mortgage-backed assets. The result? They stopped lending. Hence, the current credit crunch. This credit crunch is what makes this crisis so lethal. We can’t tolerate a prolonged situation where banks won’t lend to good companies.
It’s much like the hereditary root of insanity: You get it from your children. As the dominoes now knock down the greedy companies, the ones who rolled the dice to win the big prize, they started with newly minted homeowners who firmly believed that life owed them a McMansion even though they hadn’t saved a dime in their lives.
That’s why Congress needs to create another Resolution Trust Corporation like we used to get out of the savings-and-loan crisis of the 1980s. As then, so now, we need a government agency to buy the toxic mortgages off the banks’ balance sheets, hold them and sell them in an orderly way later. That would prevent a fire sale of homes and mortgages now and restore confidence to banks so they start lending again.
This is where Friedman goes astray. He assumes that there will be an orderly way to rid ourselves of these silly, worthless instruments some day. As I’ve said before, Friedman is a starry-eyed optimist. The people who spent their lives saving and investing with some modicum of prudence aren’t interested, and the people who want it all now, now, now, lack the wherewithal. Where is the money to fund the future going to come from? The Slackoisie tell us they’re brilliant, but have empty pockets.
Blaming your parents for handing over a world rife with debt and greed is easy, but it isn’t a generational problem. It’s a greed problem. The boomers aren’t immune from greed, and we certainly needed to accumulate as much wealth as possible to buy all that electronic stuff that our beloved children demanded, while keeping them fed and a roof over their head. You like all that stuff then. You told us you would die if you didn’t get it. So we got it for you. Do you regret it now?
But that was then, and this is now. Where were the Slackoisie when it came time to vote in 2000 and 2004? It doesn’t cost anything to vote. You just have to stop playing x-box long enough to pull a lever.
To be fair, this isn’t about Mike or me. We’re not likely the poster boys of our respective generations, and as criminal defense lawyers, we certainly didn’t get to enjoy the benefits of the bubble like our dear Wall Street friends. We’re just a couple of normal working guys, doing our best to survive. I’m just giving Mike the business because he gave it to me.
But the attitude that gave rise to some of the underlying problems, well before the “greedy Wall Street CEOs” (the evil villain du jour, per John McCain this morning) decided to go for broke, has yet to be addressed. You can’t “have it all” without doing something to earn it. You’re not going to get it all without putting in the effort. Every day isn’t going to be fun.
I read a book in 1966 by Robert Heinlein called “The Moon is a Harsh Mistress.” A theme of the book was an acronym that I never forgot. TANSTAAFL. I never forgot it.
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I haven’t found nationwide statistics yet, but at least in the state of New Mexico, the average age of those seeking help through credit counseling services due to pending foreclosure is 45. The most common reason for foreclosure was job loss (remember, 600,000 Americans have lost their jobs thus far this year, and we just added another 100,000 to that list between Lehman Bros and HP). Somehow, methinks that is not “slackosi”.
As for your snickering disdain for those who rolled the dice and lost, note that the only way to own a home here in Santa Clara County, California, over the past six years was to roll the dice. The average family income in Santa Clara County is $88K/year. The average home price at the peak of the bubble was $720K. Clearly, something had to give — the average home was utterly unaffordable to the average household, a family of four making $88K/year saving 5% of their income per year (about the max feasible given living expenses here) would take 20 years to build up a 20% down payment for a home of that price, at which point they no longer need it because their children are graduating college. So people rolled the dice because that was the only thing they could do. Yes, their home might be foreclosed upon at some point in the future if they lost the roll of the dice. But in the meantime, they had a home, and if it got foreclosed upon, what had they lost? Remember, here in California deficiency judgments are not allowed by state law, so once the home is foreclosed, that’s it as far as the former homeowner is concerned. His credit rating is ruined, of course, but that is a seven year itch, well worth a throw of the dice if you can convince some idiot mortgage lender to give you money even though clearly you have no ability to ever pay it back. If you got 100% funding on a 3-year option ARM and paid basically the same amount as you would have paid in rent for that three years, what have you lost? And if you win the bet and, in three years, are either a) making more money so you qualify for a conventional loan or b) housing prices have risen enough so you can sell your home and get some equity out as cash, well.
So yes, it was a dice throw. But in expensive housing markets where it was literally impossible within the lifetimes of people living there to accumulate the money needed for a 20% downpayment on a conventional loan, it was a dice throw that made sense. So now over 10% of the mortgages in the state of California are in default, but so it goes.
(And no, I’m not one of those who threw the dice. But I’m not going to condemn those who did).
Some years ago, I was online, chatting with Ginny Heinlein about some stuff in the wake of 9/11, and she used the phrase “free lunch.” Just as I was cranking up my spine to do as requested — call her “Ginny” instead of “Mrs. Heinlein”, and treat her like just plain folks — I read:
“I know what you’re thinking. TANSTAAFL.”
“Greed knows no age.”
I would say the same thing for laziness and lack of initiative. 😉
I’ve been meaning to do a long post on the “Gen Wars” seen here. Seems to me that people have been saying, about every generation after it, that “Good help is hard to find.” So when I see the Gen-Y slacker stuff, it gives me a chuckle more than anything. The generation senior to you considered you all slackers, too.
The question is: Is there something to it? Or is it just crankiness and bias?
I tend to view it as a selection problem. Look at it this way: If you’re in a position to complain about employees, in a sense, you’ve “made it.” Many did not, you made it to the top.
When you’re dealing with younger people, you’re dealing with the whole sample size. Not people who’ve “made it,” but people who haven’t made it and never will.
Many in your generation haven’t made it, and never will.
So it is really a generational thing?
I don’t think so.
I think the cognitive errors I blog about are the reason people in your generation think of people from Gen-Y as slackers.
Indeed, it’s far too easy to draw conclusions based upon an invalid sample. For example, I know a woman who is being evicted from a mobile home park who will be homeless on the street with her children shortly, and a man who mostly lives in a tent in the forest and comes to town to work day jobs from time to time when he starts running low on supplies. Are these Gen-X slackers, or boomers? In this particular case, they’re boomers. Does that mean that all boomers live in trailer parks or in the woods? Hmm…
While you’re right that all generations think the ones behind them haven’t held uo as well, it seems that there is a difference in kind, rather than degree, with the Gen-X, Y and millenials. It’s not just a matter of not working as hard or as well, but a different sense of entitlement, disconnected to accomplishment.
You are right that not all boomers have “made it,” but the ones who didn’t aren’t pounding their fists on the desk demanding their BMW. They don’t go home to live with the folks.
We have a name for the ones who whine to the boss: former employees. That’s the expectation and the reality.
I am suspicious of all stereotypes – especially stereotypes formed through anecdotal experience.
It may be that Gen-Y is a slacker generation. I just haven’t seen anything that I consider conclusive evidence.
Don’t get me wrong: I respect your opinion and experience. But you are human, and like all of us other humans (even we Gen-Y slackers), you’re likely to notice the Gen-Y people who strike you are entitled, but not the ones who don’t.
E.g., I’m Gen-Y. So is Jeremy Richey (ECIL Crime Blog). Neither of us are entitled snots.
Sure, there are plenty of snots. There have always been. But whether entitlement is a trait that is especially prevalent to Gen-Y (but not your generation) is what I question.
Badtux, what you are trying to explain is the logical fallacy of inductive reasoning, another topic that’s been discussed here at some length. Again, it’s a fairly simple concept and doesn’t require an explanation. Your application in this instance is misguided, but the concept is well known to regular readers.
I understand that you question the stereotype, and you know that there is no stereotype that applies to every individual. Not only is it not necessarily a reflection on you (or Jeremy), but indeed the stereotype is what allows those who are not “slackers” the opportunity to stand out and excel.
But this isn’t anecdotally based, and has been the subject of vast discussion. When guys like me, Dan Hull, Jeffrey Harrison at MoneyLaw, write about it, it is not to smear the group but rather spur those who sit on their butts whining about why they can’t get the corner office by the end of the first week to snap out of it.
We get emails almost daily from consultants who want to “teach us” how to interact with Gen-X, Y and Millenials, how to retain employees who don’t want to work, who can’t take criticism, who have no loyalty, who want top pay for little work. The articles about this, from psychologists to sociologists to human resources, are legion.
This isn’t new. The boomers see this almost constantly. There are individual who are exceptions, but as a group, it’s awfully true. Go read some of the coments to Dan Hull’s posts on the subject, and you will see some of the most whiny, misguided, egocentric ideas you’ve ever seen. It may not be you, but it most definitely real.
Scott: Putting down my rubber-tipped fencing sword down for a second. Question: How will this credit crisis affect criminal defense law?
As you know, most people charged with a crime do not have large piles of money sitting around to pay a lawyer with. It’s not uncommon for clients to take a loan out against their homes.
With property values being depressed, many people will not have any equity in their homes to borrow against.
As you also know, when economic times are down, crime is up.
What effect, if any, do you think the current credit crisis is going to have on criminal defense? Will people be able to afford lawyers? How?
How many people will slip through the cracks. The people who make too much money to get a public defender, but now who have zero equity to borrow against….
Thoughts?
That’s a great question. There are a lot of different factors at play, according to the type of work done.
For private lawyers, handling lower end cases, it’s likely to be a disaster, as clients who don’t qualify for indigent defense won’t have the funds to pay a normal fee. So, they will either have to cut fees, turn to indigent defense to fill in the void or do other types of work. I think areas like DUI/DWI will be fairly safe, as people can generally make the fees, but anything more serious could be in trouble.
For PDs and assigned counsel, the tax base is being emasculated, and there will be cuts, either raising caseloads or cutting down services or eligibility. Taxes are going up everywhere, and politicians are doing everything possible to limit the increases. We weren’t doing too well before, but we’re definitely not going to be on anyone’s no cut list this time around.
For private lawyers handling federal and upper end cases, this has been touchy stuff for years, and will continue to be. Those handling broker/dealer cases can kiss it good-bye, as there won’t be any.
So while crime usually increases in bad economic times, I’m not sure this will help a lot of people. The only area that may enjoy some decent play are drugs, which I would expect to increase though they will never return to the old glory days of the 80s and 90s. Street crime will be strong, and low level theft/violence will continue, but these guys rarely had the money for a lawyer anyway.
Am I missing anyone?
I guess not.