mikelally.net

The McKinsey Quarterly had an article back in March of the “New Normal.” I have read this short article several times and recommend you do the same. There is a lot of insight amid the prediction.

It is clear that we are not just going through a new boom/bust cycle. As the author says, we are seeing a “restructuring of the economic order.” We are going to see more government in our collective kool-aid, and not just US government. The world has indeed flattened and the rest of the world has to perform due diligence on everyone else too.

There is also going to be less leverage. The lending sphincters have tightened and it is going to take one SERIOUSLY large bran muffin and Dunkin Donuts coffee to loosen things up. Not happening anytime soon.

You’re going to actually have to earn it now…with good, old fashioned productivity gains. Some of you, I bet, even remember what those are.

You’re also going to have to deal with this:

For example, it was clear before the crisis began that US consumption could not continue to be the engine for global growth. Consumption depends on income growth, and US income growth since 1985 had been boosted by a series of one-time factors—such as the entry of women into the workforce, an increase in the number of college graduates—that have now played themselves out. Moreover, although the peak spending years of the baby boom generation helped boost consumption in the ’80s and ’90s, as boomers age and begin to live off of retirement savings that were too small even before housing and stock market wealth evaporated, consumption levels will fall.

So, pretty much everything us Gen Xers know to be true will be undone. The game has changed. The financial voodoo will go away. For about 50 years. That is how long it took us to undo the changes implemented after the great depression. Starting with the Savings and Loan mess of the 80s. Thanks fat, old, greedy, white guys.

The future, according to McKinsey is in genetic engineering, software and clean energy.