My perception is this blog has changed over the past year. It’s darker.
I’m the same ebullient, charismatic, confident guy, of course, with great abs, nice hair and a balanced portfolio. But I’m worried about you. Increasingly, people are anti-markets. Anti-bank. Anti-government and politicians. Anti-corporations, anti-wealthy. Anti-America. Anti-public worker. Mistrustful, suspicious, wary and aloof. The way so many folks here believed Canada was preparing laws to steal bank deposits, like in Cyprus, was ample evidence. That takes a helluva us-and-them mentality, and a belief the social contract’s been shattered.
But it hasn’t been. Compared to past decades and generations, we‘re more coddled and swathed in protective regulation than ever.
What has changed is the distribution of wealth and the destruction of the middle class. The GFC moved all that ahead dramatically. In the US, real estate was hollowed out, taking $6 trillion in equity out of the hides of Mr & Mrs Front Porch. Everywhere corporations have pursued productivity and profits at the expense of jobs. So now we have over 7% structurally unemployed in Canada and the US and yet record earnings and soaring stock markets.
The clerical class, for example, is gone. Nobody needs librarians, editors, secretaries, reporters or receptionists any more. Corporate pensions are disappearing. Seven in ten don’t have any. The few plans remaining are being turned from safe defined benefit to uncertain defined contribution. Interest rates have collapsed, so savings pay squat. Now houses are starting to wobble in Canada.
That seems so unfair, after cheap rates, easy loans and lax standards encouraged everyone to buy real estate. Now the mortgage is large and the future uncertain. Meanwhile wealth is concentrating at the top while the debts pile up at the bottom. The top 1% of Canadians have 35% of the wealth, while the average family has debts equal to 165% of income. There are almost 200,000 millionaires in Canada out of 13,400,000 households. Both wealth and poverty are rising.
Obviously buying a house, paying it off, having kids and saving a little in a GIC is no longer a recipe for financial freedom. In fact, many people owning houses may never be debt-free, especially since interest rates must rise and real estate fall. To be financially secure in a changed world, Canadians have to rethink home ownership, learn to invest, fear debt and embrace more risk.
Or, you blame the Man. The banks. Government. Markets. HAM.