Young people are doomed and it's all our fault!
Harvey Jones explains why the younger generation will have to unlearn everything they have been taught about their finances in the past 15 years.
What's wrong with the younger generation? The older generation.
Before you read this article, you should know one thing about me. I'm 43 years old. That makes me middle-aged. I've even outgrown the briefly trendy "middle youth" label.
I'm on the way down.
Which means I'm entitled to grumble endlessly about "the youth of today", how they're a bunch of binge drinking, semi-literate, hoody-wearing yobs who pause from robbing pensioners just long enough to impregnate the nearest truant girl.
But I'm not going to do that.
That's because my generation, and the one before, have no right to condemn the young. In fact, it should be the other way around.
Good times
Being 43, the economic bubble came at a good time for me. Since 1996, I have bought two flats and one house (to live in), and although they were in dodgy parts of south-east London, I made money on all three.
Which was nice.
I always had work, and most of my friends could find jobs as well. They weren't always very good jobs, but there was work out there.
We didn't need to worry about getting credit either, the banks were hosing us with the stuff.
And we could earn reasonable salaries and still claim state benefits, with that nice Mr Brown sprinkling tax credits over people earning up to £60,000 a year.
And how could we complain about paying too much tax, since we were promised the money would go on schools and hospitals?
So we had it all, rising private wealth and well-funded public services, and clean consciences to boot.
Yes, I know, plenty of people didn't have it so good, especially outside London. But those will look like good times compared with what is coming.
Hard times
Younger people won't enjoy a tax-free, six-figure profit simply because they bought a property at the right time. According to a new report from PWC, house prices could take until 2020 to return to their pre-peak levels.
That's if they can afford to buy a property. Prices are still far too high for first-time buyers, without parental help.
And first they have to get a job. That won't be easy, with unemployment spiralling. Those who struggle to get on the career ladder in the recession could find their prospects hobbled for life.
Even if they do get a job, many will have to clear a heap of student debt. Tens of thousands of pounds of the stuff.
When I graduated in 1987, I vividly remember one graduate friend getting horribly depressed because she owed the equivalent of £3,000 today. Now the average student owes £15,700, more than five times that sum.
Graduates won't just have to repay their own debts, they will have to pay ours as well.
It will take a generation - the younger generation - to clear the national debt acquired in bailing out the banks.
And when they've paid for all that, they had better pay into a pension, because the state coffers will be drained by the time they retire.
Golden age?
Of course, retired people in particular may disagree with me. They didn't all make a killing in property.
The crunch has also ravaged their pensions. The number of pensioners going bankrupt has risen 160% in the past five years.
But at least they have got to retire. The younger generation will be working on to 70 and beyond.
That's because the state pension is a giant Ponzi scheme, with the young bailing out the old, and without radical restructuring, it will eventually collapse.
But the Government won't admit that. It would rather sign a blank cheque and ask the younger generation to pay.
Bad example
Again and again, politicians have done everything to avoid presenting hard truths to older people.
They poured billions into the state pension and the NHS, while demanding younger people pay tens of thousands for their own education.
North Sea oil and the financial services bubble has also allowed them to postpone desperately-needed solutions to the ageing population, rising healthcare costs and public service reform.
Instead, they have dumped these problems in the lap of the younger generation.
And yes, I know younger people are partly to blame. If more of them voted, politicians might pay them some attention.
Many also have a slack attitude to old-fashioned virtues such as thrift, saving, and planning for the future. Of course they do, because who did they learn from?
Us.
Young is the new old
Younger people now have to unlearn everything they have been taught in the past 15 years.
Somebody has to teach them that finding work is hard, credit is bad, saving is good, property isn't a pension, taxes are going up, and the state won't provide.
But who is qualified to do that?
Not us.
So next time you hear some chap my age or older grumbling about the youth of today, fire some ammunition back in their direction. You've got plenty.
More: Five big banking balls-ups | Debate: The future of house prices
Comments
-
In response to the "time2go" critique of my post: I find your comments quite patronising as you graciously try to tell me what I'm "trying to say" and what I "should perhaps do" and you're a mile off on both points. The problem with the retired couples playing developer is that they don't need to supplement their pension. There is no one driven into property development by the poor pension they have. Poor pensions are used as an excuse by retired people to play property developer because they enjoy it. It gives them something to do and then they get a profit out of it as well. So no, making pensions more secure would not solve the problem at all. As for helping friends and colleagues, well guess what, most of my friends and colleagues are in the same business as i am and have access to the same information. I am lucky because the opportunites available suited my circumstances and I worked hard to make it all pay off. It sounds like you're making a nice moral point but it's really just patronising nonsense. You make it sound like there's a secret password that gets you 40K off a flat if you're in the special club I'm in. Well none of it is a secret, I don't know anything you couldn't find out with a bit of research. I just have easier access to such information. I worked hard for a long time to get my saving, and I object to the whiny 'poor me' tone with which you insinuate that I have some magical short cut that I'm refusing to share. This is one reason I hate the internet sometimes. It's great for hearing about and learning from other people's experiences, but there's always someone that feels the need to tell you what you should be doing. Even more irritating when they don't appear to know what they're talking about.
REPORT This comment has been reported. -
I'm not an expert on any of this, but I just wanted to say: Yes, I think there have been some bad examples set by the government and the media, with all the free flowing credit and 'buy to let' frenzy. But that doesn't mean that 'young people' (I'm 28, so I assume I'm still classed as young) are naive enough to make bad decisions based on these examples. There are obviously some people who have done well out of the booming finances of the past ten years, but, actually, most middle aged people have been working hard and earning an honest buck in order to provide the best life they can for them and their family. This was certainly the example my parents set for me, and i would never say that i needed to 'unlearn' anything they taught me. Jimlit- I think young people need to be realistic. You say you could afford to but the nearest council flat - then why don't you buy it? If buying a flat is what you really want to do, and that's what you can afford? Or are your expectations too high? We're not all going to be able to afford that open plan two bedroom flat in the city centre for our first purchase. My husband is a teacher, and I'm a care assistant, giving us a combined income of around £45,000, which is pretty substantial, but we still needed to compromise when we bought our flat in February. A less salubrious area, a wee bit longer to get to work, and a hard slog saving for the deposit of course - but hey, we have our own place! We can decorate how we like, and we've got a little garden, something we wouldn't have had if we hadn't compromised on the location! Anyway, what I'm trying to say is, if you're not realistic about your options, then you're not going to get anywhere. So don't look at Sarah Beeny and think 'I want the stainless steel kitchen and the wet room and the gazebo,' think, 'I want a place of my very own' and start small. I know this is a pretty obvious thing to say, but I think some people look at Baby Boomers living in their detached houses and think they've always had it that good. But, actually, they probably started out in a council flat too. My other point is about renting vs purchase. If you rent for all your life, how are you going to pay the rent when you're 80? Surely your pension wouldn't stretch to this? At the beginning of this year, we were paying £620 a month plus £160 a month council tax in rented accomodation. We've just bought a flat on a 5 year fixed rate and are paying £870 a month plus £120 a month council tax. Not a huge amount of difference when you think that the former was going to someone else's pocket while the latter is going to fund the purchase of our own home. In 25 years, when our mortgage is paid off, that's it. No more 870 a month. But if we'd been renting, we'd still be paying our £620 (although it would be much more by then obviously), month in, month out, for the rest of our lives. So, no holidays in our retirement, no good life for us, because, as previously mentioned in this thread, pensions are shite. So, as far as i'm concerned I'd far rather pay the extra money while I'm earning it rather than struggling to keep a roof over my head when I'm 82 and arthritic.
REPORT This comment has been reported. -
Just to clarify a point. I lived in Germany, on and off, for over 7 years, in 3 different locations (including Berlin)... I was all too aware that some German families buy larger than necessary properties (or BUILD their own), that they are later able to convert into masionettes. They do this so their kids can move in up stairs. They pay for it with very long term mortgages that their kids take on, should anything happen to the parents (... or the parents ability to pay the mortgage) and everyone lives happily ver after... or so the story goes. Of all the places in Europe I've visited and worked in, we are most similar to the Germans. But to compare us to them too frequently is a mistake (they're not as ethnically tolerant, for a start). But our problems are home grown... more teenage pregnancies, more debt, higher property prices etc. Blaming someone else for our troubles is British culture. We should take a leaf out of the Janpanese book, they don't look to apportion blame until AFTER the solution has been found. I'm a baby boomer, who works in Saudi Arabia, rents his home and pays no income tax... if all you people who need to blame someone have no target, blame me! Of course, the rest of you could ask why I have to rent my house... why I work overseas, in a country that has a regime that is repugnant to me... why I preference my kids over my future. But I'm sure that, like the majority of those reading HJ's provoking article, you would do the same if you were faced with poor professional teaching salaries, high taxation, high property prices etc. One last closing thought.... If you inherited a sum of money that would allow you to become a BTL landlord... would you?
REPORT This comment has been reported.
Do you want to comment on this article? You need to be signed in for this feature
31 July 2009