r0dman.com

I write a lot on here about money and the economic situation of the world, and I’m usually pretty negative about things. Talking to those in my office, where pretty much everyone is under the age of 30, most others have the same attitude. That said, it’s only the opinion of the older generations that we are so negative. I’ll explain…

It’s well known that most Gen Y’s aren’t very loyal in a workplace sense. They are happy to jump ship after a short period of time just for some extra money here or there. Apparently the way we were brought up, we have a short attention span or something. I’m not sure, someone was telling me about it once but I wasn’t really listening… haha!

Does this extend further than just employment though? Local car manufacturer Holden is in a heap of financial trouble at the moment – being down the food chain from General Motors isn’t the best place to be in an economic crisis. Talking to the Baby Boomers, they think it would be a great loss to this country to lose Holden, but talking to the Generation Y’s paints a completely different picture. The general consensus is that Holden have been producing poorly built, inefficient and overpriced cars for too long now. Technology has moved in leaps and bounds for European and Japanese cars, but in Australia we are essentially using the same outdated technology as the yanks. It’s nobody’s fault that Holden is going under but their own, and good riddance.

In this specific example I see a crash and “the world coming down” as a massive positive. The US and Australia manufacturers will be brought to their knees and forced to produce more efficient cars and work with a business model that actually makes money rather than lose it. Lots of other people just see the doom and gloom and not the positives from it. These are usually the older generations.

Now does that make us positive or negative? Loyal or disloyal? Short term I can acknowledge that peoples lives will be “ruined”, but once again I see a positive in that. Without making too much of a generalisation about Holden employees, the meaning in their life is in their car, their TV and their Jim Beam. Now while I like cars, watch too much TV and enjoy the drink, I’d be stoked to live in a world where all three didn’t exist. Others would be literally lost, but before long find some real meaning in their life, and enjoy it for real rather than all the superficial crap that we live for nowadays.

While bankruptcy and losing your car and what not is a big negative in the short term, it offers such a huge positive in the long term.

All of this doom and gloom has enormous positives out of the other side, yet the Baby Boomers struggle to see this. Why so?

My father for one would be sad to see the Aussie icon that is Holden lost to the Global Financial Crisis, but I’m happy for it to sink. House prices crashing, banks falling, economies crumbling, exchange rates not so good. Baby boomers would faint if this stuff wasn’t sugar coated when it all happens. However what is bad for some is great for others, you just need to be able to open your mind and explore the situation, rather than just look at it with your blinkers on. Gen Y’s are able to see the positives in this situation much more easily than the Baby Boomers.

Gen Y’s are loyal, Baby Boomers just can’t see that in order for their country to become strong again they need to cut off the dead wood first.

Out parents love us, right? Albeit frustrating to spend time with mine the majority of the time, I know they have the best of intentions. I’ve been reading a lot on the differences between the generations lately and it’s pretty interesting stuff.

To a lot of people, us Gen Y’s are just plain annoying. I’ve read about how Gen X’s are probably the most sour about everything. They are a generation with the biggest mortgages, transport and living costs. As it stands, they have the most to gain from Australia’s economic “slowdown”. (Makes me laugh when they use the term slowdown). Falling interest rates and petrol prices are set to benefit the Gen X’s the most. Essentially, they have had a “hard life”. They’ve worked hard to get nowhere in their eyes, while the Baby Boomers get rich from specufesting (speculation investing), and the Gen Y’s seem to get all of the good jobs while treating their employers terribly.

What the majorities don’t realise though, is that the Gen Y’s are both the Baby Boomers’ only hope to retire on a healthy sum of money, and the best way to keep the Gen X’s in a property that is actually worth something at the end of the day.

Unfortunately what most also don’t realise is that in Australia, the Gen Y’s are the equivalent to a subprime investment. The majority have a huge HECS debt, credit card debt, have little to no savings as they haven’t been earning for long at all (due to studying), are quick to sign any contract (car, laptop, mobile, internet, pay-tv) and so on. Financially… woeful!

Work is becoming harder and harder to find for a lot of Gen Y’s. I know very intelligent people who have attained high grades in university, and some two years after finishing uni are still working casual at a pub. If you’ve got a job, great, but if you don’t, times are already tough.

Now granted these are generalizations.. I also know a lot of Gen Y’s that are good savers, have very safe jobs, and are financially “on track” (whatever their path may be). I also know a lot aren’t though.

None of this really concerns me. What is the big deal about having a twenty grand debt? Sure, to me it seems like a waste of money to me, paying interest on that money, but it’s not a massive amount of money and it doesn’t affect me directly if someone else wants to do that.

What does concern me is this big juicy First Home Owners Scheme (I imagine they don’t call it a scheme for a reason). $7000 FHOG, $7000 “Boost”, $4000 from the SA Government (different schemes in different states), and an extra $7000 if you build. $25000 in free money!

“House and Land Packages from $300,000. Take advantage of the First Home Owners Grant and low interest rates. Rent money is dead money!”

Although loans are becoming harder to get, things haven’t hit home in Aus yet. Notice how there’s a for sale sign in just about every street of the country? They are the smart people. Well they are the people that are smarter than most. The really smart people sold up at the peak a while back, but these ones are happy to cut their losses and get out now before anything worse happens. The Baby Boomers are selling. The Gen Y’s are buying (and allowing the BB’s to retire early).

The FHOG is keeping the housing market afloat in Australia. Practically every Baby Boomer in the country is telling their kids to buy. Interest rates this, FHOG that. Despite their kids only having a few grand in savings, and a job that they have only worked for 8 months. “Get in before the next boom”. After all, “house prices don’t fall, they double every ten years in Australia”……

Now believe me or not, I’m going to say this. From an economic point of view, it is widely accepted that house prices will fall in Australia. It’s happened in history (as above), it’s happened all over the world, and it happens in any other investment market. A LOT of people have something to lose by this happening, hence the naysayers. I won’t go into the specifics because that is a massive rant in itself, but if you want to do some reading check out bubblepedia.net.au.

So we’re going on hypotheticals, because you’re probably skeptical that this will never happen, but lets just say it does…

The Gen Y’s all buy up on housing from the “smart” Baby Boomers. The BB’s are selling their investment properties due to a looming house price crash. First Home Owners Grant and all, Gen Y’s are buying up big, their parents are oh so proud, and celebrations are in order. Then as it happens, the “slowdown” that Australia was having turns out to be a “depression” after all. Whoops, who saw that coming? Unemployment is rife, with the Gen Y’s to go first since they have had no job loyalty in the past, and really they are just an annoying eccentric kid, right Gen X’s? They try to keep above the water for a while, try to keep paying off their loan. Maybe renegotiate with the bank and take an interest only loan for a few months while they find a new job. Rent out the house even? Unfortunately the rental market is at an all time low due to a housing surplus too (not a housing shortage as all of the developers will have you believe… coincidence?), plus all of the other unemployed people are moving back in with their parents or sharing with others.

Time for the subprime of Australia to start declaring bankruptcy. What a nice start to life Gen Y’s. Good luck getting a loan in the future with your credit status now.

But mum and dad love you, it’s a big mean world out there. It’s not your fault things didn’t go your way, nobody saw it coming. Nobody except all of the people that tried to tell you not to buy before you did.