the stunning fall of GenX, in charts

http://www.businessinsider.com/generation-x-least-prepared-for-retirement-charts-2013-5?op=1 D - also shows early vs late boomers- useful. D- and a dozen more charts as nice as this one! Great article.

impact of interest rate on student loans on bankruptcy rate, historically. enlightened Aussie policy.

http://money.cnn.com/2013/05/28/pf/college/student-loan-rates/index.html?hpt=hp_t3 D - things are about to get tougher for American poor student grads. "So the odds are about 7 million students taking out subsidized loans for the next school year will face bigger balances when they start paying off their loans after graduation. "Nothing will happen. They won't agree," said Matthew Chingos, an education policy fellow at the Brookings Institution. "And the rate will sunset back to 6.8%." " D - about what we charge our grads - a source of great shame for us. " The rate hike will only affect a third of all undergraduate students who have subsidized loans, in which the federal government absorbs some of the interest rate. Those are awarded based on economic need... To pay for the program, Democrats say Congress could get rid of tax breaks for the oil and gas industry. House Republicans aren't so keen on that. Even newcomer Sen. Elizabeth Warren has a proposal on student loans, although it hasn't made much headway. She would, for one year, shrink student loan interest rates to just 0.75%, the same as the the Fed's discount window to banks. Student debt has become a pressing issue with many young people looking for jobs. It is second only to mortgages as the largest debt consumers carry. In 2011, students on average owed nearly $27,000 in loans. " D - Big Oil comes before students. Oil has an effective lobbying presence in Washington. http://www.nakedcapitalism.com/wp-content/uploads/2013/03/STUDENT-LOANS-VS-CREDIT-CARDS_0.jpg D - American students were already in big trouble. ----- D - I had a stray thought the other day that kept me from going back to sleep. The theory was that spikes in interest rates over the last few decades resulted in Boomers defaulting on their relatively negligible student loans. While I could not tease apart the consumer bankruptcies without a whole lot more research, my theory tentatively held up. D- try to focus in on just a single decade at a time. Folks plan in a time span of a few years. So those spikes, though not a big deal compared to late 70's hyperinflation, still serve to disrupt financial planning, since it leaves folks overextended. http://www.ic.gc.ca/eic/site/oca-bc.nsf/vwapj/fig7_8e.gif/$FILE/fig7_8e.gif D - notice there is a lag of a year or three between interest rate spikes, and consumer bankruptcies. But there is a strong correlation - causative. D - wages for youth and young adults have not kept pace with inflation, let alone tuitions. D - messy chart, but just imagine a line drawn through the averaged point for college and university respectively. Also, notice how the chart amplifies every single percent. D - in conclusion, the relatively modest student debt of Boomer grads, combined with interest rate spikes, contributed to student defaults on loans, and bankruptcies. The last one, in the late 80s/early 90s, set the stage for harsh new measures for genX. These include removing grants in 1991 (my 1st year - lucky!). Also, by the mid-late 90s, not allowing bankruptcy upon graduation (within a year of me finishing school- hooray AGAIN!). Contrast our short-sighted and cheap position on student loans with the enlightened and long-term one of the Australian student loan architect: http://theconversation.com/architect-of-student-loan-system-unconcerned-by-record-debt-levels-11698 "The architect of Australia’s student loan system has poured cold water on a report highlighting record levels of student debt, saying he would not be surprised if a fifth of all student debt was never repaid... “Why should anyone care about the the size of the debt? We don’t care about the size of the debt, we care about people’s access to the system,” he said. “Of course you accumulate a big stock of debt, because there are so many graduates.” Professor Chapman, whose original paper led to wide-ranging reforms under former education minister John Dawkins, said the HECS system was designed with the assumption that about 20% of Australia’s student debt would never be repaid. “It was built into the system. Of course if people don’t have the money, they don’t repay and that’s part of the consequence of an income-contingent debt,” he said. “How much do you think the housing debt in Australia is? There has to be hundreds of billions in the stock of debt from housing mortgages and we don’t worry about that,” he said. It is better to have high levels of student debt than to lock poorer students out of education by demanding upfront fees for education, he said." D - contrast with our determination to extract our pound of flesh from student grads. What a difference...

the cavalier sense of entitlement to Old Age Security (OAS) of the middle and even lower-upper class

http://www.theglobeandmail.com/globe-investor/personal-finance/retirement-rrsps/how-to-beat-the-retirement-clawback/article8641085/ For 2013, the government starts clawing back OAS benefits when your net income exceeds $70,954. “That’s a healthy income in retirement,” said Jason Watt, an Edmonton-based trainer of financial advisers. “I like to joke that, at that level, you’re not eating cat food.” OAS benefits are completely offset by the clawback with an income of $114,640. Human Resources Social Development Canada issued some figures a few years ago showing just 5 per cent of Canadians were affected by the clawback, and that 2 per cent lost their benefit entirely. -- D - cat food. Haha. Hahaha. ... Grr. ------ http://www.civilization.ca/cmc/exhibitions/hist/pensions/cpp-a90-dl_e.shtml D - too bad we are not similarly concerned about child poverty. All those multiparty resolutions on that quietly fail, and nobody mentions them again. http://www.ccdonline.ca/media/humanrights/chart-poverty-report3.gif

Expanded CPP, part 2

http://www.thestar.com/opinion/commentary/2013/05/26/seize_the_day_on_the_cpp.html

" The whole notion that employers have any obligation to help ensure a decent income after work — something taken for granted a generation ago — is now in question.
... Wages for middle-income earners have been stagnant for 25 years. One third of family units have no workplace pensions or private pension assets such as RRSPs...

 Canadian Federation for Independent Business (CFIB). Setting up a PRPP is completely voluntary and a majority of employers will choose not to offer them to employees. Dan Kelly, president of the CFIB...

Kelly’s organization wants taxpayers to foot the bill for providing assistance to retirees who do not have adequate pensions. This is actually a tax subsidy to those businesses who refuse to provide pensions for their workers. Those companies are, in effect, asking people who pay taxes to give them a free lunch.          

(versus - D)

The Canadian Labour Congress advocates a gradual doubling of Canada Pension Plan benefits. We began this campaign several years ago because we were convinced that it is easily the best way to provide for retirement security... A modest increase in CPP contributions will produce thousands of dollars a year in extra benefits for workers when they retire. If we phase in a small premium increase over seven years, it would result in a future doubling of maximum benefits... 

In fact, the CPP offers every Canadian worker $2 of savings for every $1 they put in. That’s quite a deal..."

------------------

D - a few observations:

1) wages have been stagnant for '25 years' - we only noticed this now, why? (See later- rhetorical.)

2) 1/3 of families have no RRSPs (as if this is new) - look at this chart. It is complex in the details - see the per-age category breakdown. A generalized trend is hard to suss out of it.

3) CLC - 'phase in a small premium increase over seven years'...

Why now? Cuz the Boomers are retiring. The oldest at 65 started in the last 1-2 years.

Meaning later Boomers will merely be clipped by the changes.

Whereas Generation X (and Y and then Z later) will bear the brunt of it.

Our older dinner date ordered the lobster, excused themself to the bathroom, then bolted and left us with the bill. Again.

If the Boomers wanted higher benefits in retirement, then they should have asked for higher premiums. A generation ago. THIS is a sore abuse of the 'each generation picks up the next's bill' arrangement. This is cold, hard lobbying. It's selfish and manipulative. And immoral.

As it is, the Boomers only paid the new higher 10% CPP payin rate for HALF their working careers.

This is just more of the same.

The Boomers have #s (biggest demographic), organization ( CARP - now that it has shed any veneer of actually being for retirees, instead being a callous Boomer lobby group) and participation (they VOTE).

They realized that nobody can stop them. And so. They are taking it all. Everything on the banquet table, taking it with them. Leaving a few breadcrumbs on the floor for the generations that follow.

Thanks for nothing.

(The small biz and labour versions only vary in nuance - social class, career. They share the GENERATIONAL analysis - something as powerful as gender in feminism as a tool...)

GenX and the politics of global warming. Ontario Liberal by-election.

http://www.science20.com/science_20/why_generation_x_so_skeptical_about_climate_change-92230

Generation X, they say, is lukewarm about warming - they are uninformed about the causes, unconcerned about the potential dangers and doubt it is happening.

It isn't just the stupid people, 12% of those who aren't buying it are quite scientifically literate. This corresponds to other surveys which also found that as scientifically literacy went up, so did skepticism about global warming.   That larger study didn't just do the simple liberal or conservative (which is codespeak for Democrat and Republican to simplistic sociologists) correlation this new analysis did. The new analysis found that 50% of liberals were very concerned about global warming while 0% of conservatives were.  The conservatives are Flat Earth Holocaust Denying Baby Killers, right?  Well, no, unless 50% of Democrats are the same thing.

--------------

D: BIAS ALERT - I am a card-carrying member of the Ontario Liberal Party!!!
I'd also like to apologize for the big mess I made of fonts. I have not used the new Google blog interface and forgot about its quirks.

D - This is pretty near 'n dear to my heart. I'm helping Eric Davis win the local Ontario provincial byelection. This riding may be the key to a Liberal majority in the province. Two issues dragged me off my complacent butt to help last election:
1) hefty grant for university undergrads (I sympathize) and
2) taxation on fossil fuels.
I'd like to mention that I read ScienceDaily, the best science news site on the web, well, DAILY. So feel confident I understand the general consensus by scientists about human-emitted CO2 and global warming.
For the record I do believe in the idea of human-caused CO2-based global warming. However, there is no need for me to 'place all my eggs in 1 basket' on the issue. In fact, I do not need to mention global warming whatsoever.  How?
Pollution and health complications is widely understood and accepted, even by global warming deniers. As is the toll that vehicle accidents impose.

Here are the positions of the 3 major parties:
1) Liberals - incentives for green alternative power sources such as solar and wind. They took quite the hammering in rural areas with wind generators. There is some sentiment that signing a deal with a foreign company (Samsung) for solar capacity was not well researched. Status quo for taxes.
2) NDP - http://www.thestar.com/news/canada/politics/article/1034082--ndp-vows-to-wean-ontario-off-nuclear-power For home retrofits for efficiency. Against nuclear power. On taxes: http://ontariondp.com/en/tag/hst Hudak adopts New Democrat position on hydro affordability NDP Energy and Finance Critic Peter Tabuns says Ontario families should take Tim Hudak’s support for New Democrat Leader Andrea Horwath’s proposal to take the HST off hydro and home heating with a grain of salt.
D - but the NDP go farther than the Conservatives:
 NDP Leader Andrea Horwath unveiled her plan to protect drivers at the pumps by setting a weekly price cap on the cost of gasoline. NDP Leader Andrea Horwath unveiled her plan to protect drivers at the pumps by setting a weekly price cap on the cost of gasoline. “Life keeps getting more and more expensive and it’s time to give people a break,” said Horwath. “We can’t fix everything, but we can take steps to protect households from gas gouging.”
3) Like I said, the Conservative plan is "NDP lite". 

D - OK, these are messy issues. Not all base electricity generation in Ontario is derived from fossil fuels. 

http://www.theobserver.ca/2012/08/03/close-coal-plants-now-report-advises

Ontario has said its remaining coal plants must close by Dec. 31, 2014 but unions for 300 workers at the Lambton Generating Station at Courtright, as well as community leaders in Sarnia-Lambton, have been pushing the province to convert it to natural gas power.

The alliance says that’s not needed because Ontario’s electricity generation capacity has grown by 13% since 2003. It adds that closing the coal plants now could reduce electricity rates by about $367 million annually, or about 2.3%.

D - OK. I'd like to say that, while I do NOT support the construction of brand-new nuclear reactors, that refurbishing the existing ones are the mid-point in their lifespan is highly cost effective. The cost to refurbish, thereby doubling lifespan, is only about 10% the total cost of building it in the first place. Once built, it is a no-brainer to invest in such mid-life refurbishing. 

http://www.theglobeandmail.com/report-on-business/natural-gas-winning-the-race-for-energy-efficiency/article4465567/

D - natural gas generators have become increasingly efficient, whereas coal plants have stagnated for decades.
http://www.theglobeandmail.com/report-on-business/natural-gas-plants-have-become-more-efficient/article4465551/?from=4465567

http://www.nrwc.ca/about-wind/research/

http://www.energy.gov.on.ca/images/content/figure5.jpg

(D - Ontario power sources, past present & future.)

D - right now we still have rich uranium ore sources that make nuclear power a source of low-CO2 power. At some distant future time, as we turn to poorer ore sources, there will a break-even point in CO2 emissions where it will only match natural gas. Natural gas is a much better source of power for low CO2 than coal. Coal sources, as we increasingly turn to marginal and lower-quality sources, has become increasingly less efficient. 

http://en.wikipedia.org/wiki/Coal#Coal_as_fuel

The typical thermodynamic efficiency of coal power plants is about 30%, so of the 6.67 kW·h of energy per kilogram of coal, 30% of that—2.0 kW·h/kg—can successfully be turned into electricity; the rest is waste heat. So coal power plants obtain approximately 2.0 kW·h per kilogram of burned coal.

The U.S. Energy Information Agency's 1999 report on CO₂ emissions for energy generation,^[64] quotes a lower emission factor of 0.963 kg CO₂/kWh for coal power. The same source gives a factor for oil power in the U.S. of 0.881 kg CO₂/kWh, while natural gas has 0.569 kg CO₂/kWh. Estimates for specific emission from nuclear power, hydro, and wind energy vary, but are about 100 times lower.

D- so yeah, Google coal pollution to see just how messy it is. By the time we introduce new clean coal tech to make it comparable to other sources coal is no longer particularly cost-effective from a power perspective. 

http://k-w-bike-walk-bus.blogspot.ca/2008/04/cars-are-not-cost-effective.html

D - the above blog of mine continues many entries on the cost of privately-owned vehicles for transit in our society. IMHO, the price of gasoline, to reflect incorporating the expense of negative externalities of its use on society, should be DOUBLE. The #s support me. 

It's pretty rich that the NDP on one hand want to have incentive to improve home power efficiency (while subsidizing power and heating costs with tax breaks, thereby removing any price incentive to do so), and on the other hand, wish to merely subsidize 'Big Gas' on the road without any matching incentive at all! 

The end result of this ill-thought out policy (and the Conservatives are just "NDP lite" on this, remember) is increased use of fossil fuels, little incentive to conserve or reduce usage, and increased costs to health care due to pollution emission. 

The conservatives are locally touting a new widened highway between Kitchener and Guelph. I use this road part way to Cambridge via Fountain street to get to work. 

http://www.therecord.com/news/local/article/765058--businesses-see-crisis-as-new-highway-7-stall-stretches-on

Ontario’s Liberal government approved a divided, four-lane freeway in 2007, but delayed construction until some time after 2015, with no date to begin...

In 2007, Ontario cited economics and safety in approving the 18-kilometre replacement highway, north of the current two-lane road. It was estimated to cost $300 million.

D - here is where the Conservative plan gets into trouble. Where is the funding coming from in their plan?!

http://www.thestar.com/news/canada/politics/article/998840--hudak-promises-income-tax-and-spending-cuts

"(Hudak) He said the cuts will not touch spending on health care and education, which he will increase at levels similar to what McGuinty outlined in his March budget.The Liberals warn there’s a $12 billion gap between the taxes a Hudak government would cut and the revenues it would bring in.“The numbers just don’t add up,” Infrastructure Minister Bob Chiarelli said..."

http://k-w-bike-walk-bus.blogspot.ca/search?q=ontario+coal

D- here we have a (bit dated) pic of Ontario and coal plant locations. 

The Liberals are trying to wean Ontario off of King Coal: http://news.ontario.ca/mei/en/2012/07/ontario-converts-coal-plant-to-biomass-creates-200-jobs.html

Eliminating coal-fired electricity in Ontario is the single largest greenhouse gas reduction measure in North America.

D - in summary, the 3 parties have the following positions:
1) NDP - biggest fossil fuel tax cuts. Anti-nuclear. Home retrofit incentive.
2) PC - medium fossil fuel tax cuts.
3) Liberal - no tax cuts. Pro-nuclear. Anti-coal.
D - why do I support the Liberals? Because only their plan recognizes the combo of CO2 and health care costs that subsidizing fossil fuels with special tax cuts would incur. The consumer is ALREADY getting  a special break to handle the impact of various electricity-related costs in the form of a 10% Liberal discount.

http://www.thestar.com/news/canada/article/907641--utilities-forced-to-tout-ontario-government-s-10-discount
"Ontario’s Liberal government is forcing utilities to tout the 10 per cent electricity discount on hydro bills every month for the next five years, the Star has learned.

Over the next few weeks, millions of households, farms, and small businesses will begin receiving the new “Ontario Clean Energy Benefit” on their monthly hydro bills.

The measure is designed to offset an expected 46 per cent increase in electricity costs in the coming five years."

McGuinty said Wednesday that the discount is important to Ontario families and small businesses.

The price break would save a homeowner using 800 kilowatt hours a month $153.60 a year...

“We’ve asked a lot of Ontarians. We’ve asked them to invest in a long-term energy plan. We put it all out there. It’s thoughtful, it is responsible, it is honest . . . we’re renewing 80 per cent of our system over the next 20 years,” the premier (McGuinty) said at Ryerson University.

-------------------
CONCLUSION:
D - There is no way to encourage increased household efficient use of electricity with even more cuts, all which cost revenue to the tax base. Only the Liberals stand firm in their conviction that paying more health costs via subsidizing fossil fuels makes no sense.

present status of CPP pension fund

http://www.cbc.ca/news/business/story/2012/08/10/cpp-fund-up.html

The Chief Actuary of Canada said the CPP will remain sustainable for at least the next 75 years, and says that contributions are expected to exceed benefits paid until 2021. That means CPP won't need to dip into its investment returns for the next nine years...


The Canada Pension Plan Fund ended the first quarter of the fiscal year with $165.8 billion in assets, a $4.2 billion increase since the previous quarter.

Canada's national pension plan received $3.5 billion in contributions and earned $800 million on its investments. Its portfolio returned 0.5 per cent for the quarter.

---------------

D - a far cry from $250 billion prediction for in four more years. That was the prediction BEFORE the great economic crash of the last few years.
And 2021 is when the Boomers retire in earnest, in increasing numbers.
Even something as simple (and costly) as widely prescribed statins can completely skew demographic predictions in a hurry.
The above CBC story is NOT good news.
Trying to be positive about that news is like re-arranging deck chairs on the Titanic. The iceberg has already struck us. We just are not quite drowned yet.
And the lifeboats are only numerous enough for first class customers - the Boomers.

my residence ownership plan. pretty modest.

D - so here I am. Age 41. 3 years out of a bankruptcy on my student loan. I have finally reached the income level that is average for - wait for it- the average of both full and part-time work in Canada. About half the full-time average. I still need to rebuild my credit (finally have savings for a secured credit card).
Assuming I get my SH*T together in the next year (working MS office certs through an adult school in town), and get into some decent admin work (databases are a hot job skill at local U campuses - the older secretaries can't do it), I can manage a nest egg in the next few years.

If I try to buy a standard house (suburb, big enough to pass primary residence rules of the OBC - Ontario Building Code), the plan must be as follows:
1) save 5 years for the house downpayment, to age 46,
2) pay the house mortgage 25 years to own it, to c. age 72.
At age 72, as the OAS rules stand, I max out my payout. I need to find work I can keep doing to age 72. At 41, I'm already aware of the impact of age on my body.
On my own, if I end up without a significant other, this is the best case scenario to own my primary residence and enjoy a decade or two of well-deserved rest at the end.

My OTHER plan is much more unorthodox, and likely more reasonable. Basically, it's a trailer park but with a twist.

D - that's a Kottage RV, made by that B.C. company. It's a converted shipping container, so you know it's gonna LAST. Those things are tough! It folds up to fit on a standard transport truck trailer. Then opens up to standard trailer dimensions.
I priced them out, and found a small and medium one used for $45 and $60G respectively.

D - here is a more advanced and spacious version of this concept, made for the USA gov't by "Green Horizons" to be emergency off-the-grid shelter for an emergency.

http://www.greenhorizonmfg.com/products/rapid-response/sfh40-2
The SFH-40 (A is off grid, B is basic) opens up the entire side to nearly double the area. But it still fits IN a transport truck standard trailer. That means no special escort vehicles, rare and expensive oversize trailers and road special rules.

D - the fancy pants zombie apocalypse version costs c. $200G, or may cost as little as $100G or so with economies of scale. The "B" version is presumably considerably less, though would require a standard trailer park connection to be habitable.

D - here is the "thought experiment" that got the ball rolling on this pop-out portable house concept: http://assets.inhabitat.com/files/lt_mdu1.jpg

http://inhabitat.com/lot-ek-shipping-container-house/ The LOT-EK MDU unit.

http://www.lot-ek.com/filter/residential/MDU-Mobile-Dwelling-Unit

D - while very nifty, this never reached production.

There are also many concepts based on flat-pack or pop-out 20' shipping containers, such as the ECO-POD.

D- so why bother?

1) they can function as a standard trailer at a trailer park,

2) plunk it down sans wheels /trailer on a concrete pad and you have a permanent residence,

3) upgrading or buying the "A" version allows off-the-grid living. 

Keep in mind it takes a transport truck to move these. The 20' units can likely be towed by just a big pickup truck, 3/4 or 1 ton models.

D - I'm a handy guy. I had planned to co-build houses with my bud a few years back. I (I know- funny) helped him build a submarine hull, so torch cutting and MIG welding is doable. Not right now, but down the road, I could buy a $500 bux beater unit of 8x20' to experiment upon. I can check out the existing products on the market and copycat them. 

http://toronto.kijiji.ca/c-cars-vehicles-RVs-campers-trailers-cargo-utility-trailers-40-converted-Insulated-Shipping-Container-W0QQAdIdZ386089407 Here are some boxes that were converted for the 1976 Olympics. Ack - claustrophobic!

Port-a-mini and BigSteelBox look like promising local ops to check out.

That's right- my only own-a-house plan that does not involve working to age 72 involves living in a big converted steel box.  

My bro-in-law suggested I lease a lil' corner of some old farmer's property near the edge of whatever city I work in.  This has issues, such as needing water and septic and power system and so on. 12V trailer appliances are likely a must, as well as very modest and "green" style of living. 

D - and I don't even have kids - could not afford them anyway, nor take care of them myself. 

D - there is some chance that I might meet (or have met?) a woman that I could live with. 2 incomes turns the equation around in a hurry. Being middle-aged with no savings and no house is a pretty grim scenario to be stuck in.

Living in a trailer park for the 2nd half of my working life might be the only practical way to retire otherwise.