Yes, and as the urgency mounts daily...Rudds quote rings near...

"I actually believe in a big Australia I make no apology for that. I actually think it's good news that our population is growing,"

In all debates on population and aging population, one factor is never mentioned. The GNP is produced with ever decreasing effort and the only problem is the distribution of the GNP.
In 1960 it would take some 20 wharf labourers to load a ship with 15,000 tonnes of wheat, in 1961 a mechanical loader was installed on the same wharf and that amount of wheat was loaded by two or three man operating the equippment in 48 hours.
Almost the same cost savings was achieved on the farms and on transport to the port.
This happened in many other industries, but most of the savings have been usurped by the providers of capital.
The article by Terry McCrann was the most sensible that I ever read from him, and I read many, but he must really mellowing in his old age.
Another thing that the population debate needs, is some straight talking; some countries should be told, you cannot go on breeding like rabbits, and others, that they are not entitled to consume, or waste most of the goods produced in sweatshops, but for that, we need some honest politicians and leaders.

Will Baby Boomers Hurt Equity Valuations for the Next 20 years?

A recent Barclays study suggests demographics and baby boomers may keep equity valuations down for another 20 years.

The Barclays Equity Gilts Studypublished in the Financial Times on Feb. 10, 2010 suggests these bubbles were driven by shifts in the demand for equities and other assets and these, in turn, were driven largely by demographics.

Equities only became mass-market savings vehicles in the 1950s, as investment management companies started marketing their services.  This process accelerated sharply in the early 1980s, which is exactly when baby boomers began entering their ages of peak productivity and savings.

The introduction of 401K pension plans in the U.S. further incentivized individuals to start playing in stock markets.  As of 1980 the world had survived without a true bubble since the Great Crash of 1929.  Economic growth continued to be unusually stable until 2000 and the bubbles of the past decade.

As baby boomers aged and the long bull market made them more confident, they ‘over-invested’ in assets around the world. The process was already apparent when Alan Greenspan made his famous speech about the risks of “irrational exuberance” in 1996, and become obvious with the Asia crisis of the following year, and then the great Internet bubble that finally burst in 2000.  

Barclays compared cyclical price/earnings ratios on stocks since 1950 with the ratio of 35-54 year-olds in the population.  Stock valuations became most extended just as baby boomers were saving and producing most.

The Barclays study suggests boomers were a major force in creating the later credit crisis. Mistakes both in U.S. monetary policy and in regulating mortgage lending were serious contributory factors to the credit crisis.  

However, the study contends that underlying demographic factors were a more potent underlying force.  Baby boomers, faced with the crash in equities and with their retirements imminent, they would only have been expected to put money into bonds and other debt products, thereby helping to push interest rates.  That’s exactly what boomers did.

This drove a strong acceleration in the global appetite to put savings into debt financial instruments, which is the same thing as a surge in the global appetite to lend.

The implications here for the future are not good.  The proportion of 35-54 year-olds in society will keep declining for another decade, while the growth in the retired population will be very sharp.

This means equity valuations should keep coming down.  The demographic shift that drove the equity bull market for 20 years can be expected to drive a bear market for another 20 years.  This would suggest that this bear market has another 10 years to run.
Link -
http://stocksonwallstreet.net/featured/will-baby-boomers-hurt-equity-valuations-...
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This Barclays study does suggest a linkage between Demographic shifts & share markets, Demographics also has far reaching implications for the general Global Economy, which in turn affects the financial & equity markets!

Whilst this study talks of the 35-54 year old spread, I prefer to use the breakdown of 45-55, being the Peak Earning & Spending years, which is then followed by the 55+ era, which is more related to saving for retirement and a consequent decline in Consumer Spending!

Given the Peak Spending period is 45-55, I take 50 as the average to then guage the rise & fall of Economic activity and therefore overall share prices.
If we take the early 80's, the mid 90's and 2006, then cast back 50 years, you will see the correlation of the 50 years, to the absolute start of the Baby Boom in the early 30's, the real Boomer explosion started in 1946 and the Peak of the Baby Boom was in 1956.
Of course, there will always be issues external to demographics, which will influence events, such as the first Oil Crisis in 1973 and the 9/11 attack in 2001.

I should stress that Demographics are not the only issue that have, are & will continue to influence events.

Certainly, Energy, in all its forms has a very significant impact and the Peaking of Global Oil in 2005 has enormous ramifications, as will the upcoming declines in the supply of Gas & Coal, within the next 30-40 years!

That said, it does seem that the Barclays study focus may have been too narrow, given the likely effects of Energy decline, Climate Change and an actual decline in total Global population (in 20-30 years), it would appear logical that the "Bear Market" could be considerably longer than another 10 years!

To those who would say, we just need another Baby Boom?

I'm sorry, our capacity as a country and a planet to sustain a greater population, simply isn't there. We are now running headlong into an Energy crisis of monumental proportions & our other Essential resources including Water & Food will also come under increasing stresses.

In short, we are between a rock & a hard place, there are no easy choices, but we will need to decide between a better now and of robbing future generations of their rights, their financial welfare & perhaps their very existence?

The next 20 years will be very different to the last 20 years, choose wisely!

hawil wrote on Aug 15^th, 2010 at 2:16pm:


Yes, it would seem to be that we are all suffering from the same mass hysteria & hallucinations!

Taiwan population to reach zero growth 4 years early

TAIPEI (Taiwan News) – Taiwan’s population will reach zero growth in 2022, four years earlier than previously thought, the Cabinet-level Council for Economic Planning and Development said Monday.
Due to a sharply falling birth rate, the country’s population will begin to fall from the following year, reports said.

The CEPD studies new projections for Taiwan’s population growth once every two years using figures from the Ministry of Interior and the Directorate-General of Budget, Accounting and Statistics. The latest estimates for the period 2010-2060 were the subject of a CEPD meeting Monday afternoon, the Chinese-language United Evening News reported.

The previous estimates, released in August 2008, predicted zero growth in 2026, but since then the birth rate recorded an even sharper decline, the paper said.

The CEPD report took a range of elements into account, including birth and death rate, the graying of the population and migration, to reach its conclusion. The speeding up of the zero-growth phenomenon came despite the migration to Taiwan of numerous brides from Southeast Asia and the liberalization of restrictions on people moving in from China.

Officials warned that the advent of zero growth would bring serious social consequences, the evening paper said. A larger number of elderly people as a proportion of the total population would make it harder for businesses to find employees, and might force them to move overseas, seriously damaging the country’s competitiveness, officials said.

The CEPD was likely to discuss measures to encourage births and eventual changes to immigration policies.

If trends predicted by the CEPD persisted, around 2027 every two working citizens would have to support one non-working citizen, the paper said. At present, there was still no cause for alarm because the working population was still growing in number, according to officials.
Link-
http://www.etaiwannews.com/etn/news_content.php?id=1348346&lang=eng_news&cate_im...
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Most of the rest of the world will also be at ZPG, by 2040!

Population and Density

It shouldn't surprise anyone that Japan is not growing like gangbusters. Demographically speaking, it's not a young country anymore. This is one reason why Japanese stocks have never fully recovered from the 1989 crash and another reason why Japan's public-debt-to-GDP ratio has been sustainably high. Japanese savers have been content to fund domestic government deficits because they prefer the safety of bonds to taking risks in the stock market.

As you can see from the population pyramid of Japan (see charts below) it's relatively top-heavy. That means Japan has a large percentage of its population at or near retirement age. To the extent that "demographics is destiny' - demographic trends drive consumer spending and corporate earnings and/or indicate the coming strain on government financiers - Japan doesn't look like much of a growth stock.

And now - why'll we're anticipating and preparing for the next great U.S. dollar crisis - we'll pause in our regular reckoning to look at a few of the population pyramids that struck our fancy. The question, posed by a long-suffering reader, is whether Australia faces a lot of long-term negatives because it shares the same demographic profile as Japan or the nation's of Western Europe. Before we answer that, let's look at the population pyramids we selected from here. As a reminder, they show you the distribution of the population in terms of age.









What have we learned?

Japan and Italy have ageing populations. Through either low immigration or low birth rates, or a combination of both, ageing countries face some grim demographic math. Pension (private and public) pensions are likely to increase even as the tax base shrinks. Taxes go up on younger people. But government borrowing probably increases too, unless benefits get cut. If the borrowing is not from domestic savings (where it would then NOT go to private enterprise) it must be done on global markets at whatever the market price for money is.

Iran is very young, but ruled by theocratic old men. Hmmn.

The U.S. has a squarish figure. But the pyramid does not reveal that for most American workers, real wages have gone nowhere since 1974. The boomers might be able to retire by liquidating their share market and housing wealth. But who are they going to sell to? The government?

Australia looks surprisingly curvy, which reveals something demographically unusual. Australia's GenX generation is actually larger than its Baby Boomer generation. Hmmn.

The Boomer in both parties are promising the sky to themselves and Gen Y and the Millennials. Who's going to pay for it? The Xers that run small businesses and are in the prime of their wage earning years. Give them they yoke. There are future fields to plough!

It will be interesting to see how the votes breakdown over the weekend. As an Xer, but not an Australian citizen, your editor remembers recessions and his first job (as a 12-year old bus boy in a restaurant owned by a friend's dad). We generally reject most stereotypes. But we do find most Xers to be suspicious of or at least not expect a lot of government. However, government may be expecting a lot of all of us!

What can you take away from Australia's demographic chart? Given that there is no immediate funding crisis for social welfare, it's going to be pretty easy to convince Aussie investors to invest in government bonds as an alternative to shares. It might even be mandated that popular investment vehicles are required to own "safe" government bonds and thus, directly fund deficit spending for years to come.
Link -
http://www.dailyreckoning.com.au/population-and-destiny/2010/08/17/
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When considering the impact of Older/Aging Demographics, it would be appropriate to remember -
1) An Older/Aging Dempgraphic will spend less & save more, under normal circumstances, therefore Demand would normally decline.
However, these are not normal times, as a large chunk of what Global Boomers were relying on for their retirement years, were in Housing &/or Shares and both of those areas have had &/or will have considerable falls in value, thus placing many Boomers in very difficult circumstances.
2) Dempgraphically, the 45-55 years are the Peak Earning & Spending years, whilst the +55 group is where saving for retirement commences in earnest and therefore Demand will start to be impacted a full 10 years prior to a 65 year olds retirement.  

Can Europe Survive Its Population Plunge?

Europe is dying. The Washington Post, among others, reports that, within a hundred years, there will be the rare German in Germany or Italian in Italy. Some demographers believe it is too late to correct Europe's plunge into extinction. "The fall in the population can no longer be stopped," reported Walter Rademacher of the German Federal Statistics Office.

Replacement fertility rates are 2.1 children per woman in developed nations. No nation in Europe can claim that rate, and most fall under 1.6. At those levels, each generation is barely half the number of the preceding one. The working-age population is reduced by 30 percent in just 20 years, having a devastating impact on economies. Today, European Union and United Nations experts are sufficiently alarmed to call councils to address the population crisis. The irony is that this is a crisis of their making.

In the 1960s, futurists painted a dire picture of population explosion and its concomitant depletion of resources. As recently as ten years ago, the UN's own Millennium Summit Declaration insisted, "We must spare no effort to free all of humanity, and above all our children and grandchildren from the threat of living on a planet irredeemably spoilt by human activities, and whose resources would no longer be sufficient for their needs".
Link -
http://www.insidecatholic.com/feature/can-europe-survive-its-population-plunge.h...
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The real irony is that there are ironies, within ironies and that the crisis is not in the making, the demographic crisis has already started!