Financial institutions - we don’t trust you

Harris Poll has asked Americans about their trust of financial institutions (this includes all sorts from banks to insurance companies) and discovered an interesting generational difference.

Almost two-thirds (64%) of Gen Xers (those aged 33-44) and 61% of Baby Boomers (those aged 45-63) say they do not consider any of these to be honest and trustworthy compared to 52% of Echo Boomers (those aged 18-32) and 53% of Matures (those aged 64 and older). So grandparents and Yoof have more trust than their parents. Dick Stroud

Age specific social networking is high risk stuff

Back in July 2007 I wrote about a social networking site called TeeBeeDee.com that was: “founded to provide a voice for the wisdom of our crowd – those of us who have learned from our life experiences and want to keep on growing at midlife.”

Anybody who has read my blog will know that I am highly sceptical of social networking that relies on the person’s age as the primary reason to get and retain their attention.

In a note to members, the founder said that the company had lacked the resources to continue developing the site: “Our business opportunity proved disappointing.” The site had raised more than $9 million but had only 70,000 unique visitors last month. Instead, they were quite content with using Facebook, which has seen its fastest growth in users over 55.

The article concludes that: “Baby boomers apparently did not want to be categorized away by their age.” Sad but inevitable. Here is the Reuter's note about the business. Dick Stroud

Growing Old in America: Expectations vs Reality

The Pew Research Center has just released a 152 page report detailing the research results from a telephone survey of a nationally representative sample of 2,969 adults living in the US. The survey was conducted by Princeton Survey Research Associates International.

It is pointless attempting to summarise such a long document, especially since I haven’t yet read it, but, from first glances it looks to contain some interesting ideas. The report covers

• Demographics of Older Adults
• Perceptions of Old Age
• The Daily Lives of Older Americans
• Family and Friends
• Intergenerational Relations within Families
• Work and Retirement
  

So when is somebody ‘old’? Amusing results.

When I have worked my way through the detail I will comment. The report is free so there is no excuse for not downloading. Dick Stroud

The old have seen it all before

McKinsey has just published a paper about how the spending behaviour of US consumers is changing and concluded that after two decades of unsustainably high levels it is returning to where it was in the past - much lower.

The bit of the research that really interested me was the difference in the expectations of how the stock market will behave over the next 30 years. Of course nobody has the faintest idea, but answering this question is a good proxy for people’s optimism about the future and the extent to which they perceive today’s economic problems as transitory. The chart says it all.

McKinsey concludes.

Finally, the historically poor returns of US equity markets during the lives of investors under the age of 45 may be creating a generation of equity-averse consumers. Less than half of US respondents believe that the stock market will produce returns above inflation over the next 30 years. Eighty-five percent of consumers from 36 to 45 believe that it won’t.

What a fascinating conclusion. Do the young know something the old don’t? Methinks not. This is all about the dent this recession has created to the risk averseness of the younger age groups. A factor that will be around for a long time to come. Dick Stroud

The biggest Ponzi scheme of all time

There’s lots of stuff being published about Madoff and how his Ponzi scheme was the biggest of all time. He might have burnt through 20 Billion, some say 50 Billion, whatever, it's a big number.

Compared with the UK Government, Madoff hadn’t got past page one of the Idiots Guide to Ponzi schemes. He was an amateur, not even worth a footnote in the history of Ponzis.

The article in the Sunday Times by Dominic Lawson spells out the unbelievable mess the UK is in because of the ageing population and the unwillingness of the Government to have done anything about its consequences other than make matters a hell of lot worse.

Mr Lawson quotes a European Commission report, about The Sustainability of Public Finances, dated 2006 (yes 2006) that said:

The United Kingdom has been placed in excessive deficit procedure and the European Council has recommended that the United Kingdom bring the deficit below 3 % of GDP by the financial year 2006/07 at the latest.

As a result of the weak fiscal position in recent years, the debt/GDP ratio has risen by around 5 % of GDP in three years, to 42.8 % of GDP in 2005 (42 % for the financial year 2005/06).

Do you know what the debt/GDP ratio is now? Come on have a guess. You won’t believe it? Trust me it is a big, big number. OK, double the figure in 2005 and add a bit (87%).

Lawson goes on to say that the IMF says that the

Fiscal headache of the credit crunch is as nothing to the migraine which, absent a change in policies, is about to pulverise us: it states that in the period between now (yes, that is 2009) and the middle of the century, the fiscal impact of the credit crunch will be about a tenth of that caused by the demographic crunch.

Let me spell this out for you. The Ponzi scheme we have been living through over the past couple of decades, but especially since the mid 1990s, has been paying Jo Public a ridiculously large amount compared with the money contributed.

Everybody has been living in Alice in Wonderland. The Government was able to position itself as the wise investor and manager of the nation’s wealth and Jo Public has done pretty well with zillions of new jobs created in the Public Sector and a continuous stream of initiatives, interventions, and policies to make everybody feel happy.

It was all a sham. Just as the credit crunch caused Madoff's scheme to collapsed so it has with UK New Labour Ltd. The scheme is collapsing in front of our eyes and guess who is going to pick up the tab. Jo Public, Jo Public’s kids and their kids. What a mess.

Marketers need to start preparing for how the will exist and thrive in a low growth, austere economy. Better start today. Dick Stroud