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The Boomers are Pulling Their Money

There has been a great deal written about the fact that the Baby Boomer generation has control of the greatest amount of wealth this country has ever seen.  In the past the focus has been on the ultimate transfer of that wealth.  But, of late, we’re seeing that wealth disappearing at a phenomenal pace with market decline on top of market decline.

So, the question remains how long will the Boomers leave their money in the market?  My guess (and anecdotal evidence) is that they’re starting to pull it out in droves, and I don’t think that’s going to stop between now and Election Day.  I don’t believe they are going to put the money under their mattresses, but they are probably going to convert it into FDIC insured accounts until the market settles.
Obviously, I thought the bailout was a bad idea.  I put up a couple of posts arguing against it. And, I’m pretty sure, like most “great” government solutions, this one is going to suffer from unintended consequences – namely, the continued decline of Wall Street.  
See, by raising the FDIC insured amount to $250,000, the government just encouraged people on fixed incomes (read:retirees) and those about to retire to pull their money out and put it where it’s safely insured.  
The politicians used a lot of doom and gloom rhetoric to rationalize the bailout, and they built up the expectation that as soon as it was passed the market and economy would be turned around. But, it’s just not working out that way.  There is no way it can.  We’re going to continue to see market declines through Election Day, and my prediction is that the Democrats are going to win big across the nation because of it – although, I hope I’m wrong.
No, it’s not because the Republicans are the cause of the economic downturn.  There’s plenty of blame to go around on both sides of the aisle, and in our own lives (count your credit cards). However, most Democrats believe that government can provide the solutions to every social issue and economic challenge, so it makes sense they would vote for the bailout.  Whereas, Republicans are supposed to believe in a free market economy (or at least something resembling one), many turned their back on those values and opted for the magic quick fix.  
The problem is, there is no such thing as a magic quick fix.