Scary Story: Global Stock Declines and Baby Boomers

In the past decade or so, writes Christopher Carroll for RGE Monitor, an economist asked to tell a horror story over toasted marshmallows at a cookout would not have conjured up empty McMansions haunted by subprime ghosts (though in retrospect that would have been a pretty good tale).

Instead, among friends if the mood was right, we might say to each other in a spooky voice “think what will happen if the baby boomers all decide to cash in their stock investments at the same time!” Followed by nervous laughter and a quick change of subject.

At first blush, it seems that we were barking up the wrong tree. Today’s global conflagration originated in the market for subprime mortgage securities, which has little evident connection to boomer retirement investment decisions. It is easy to follow a direct chain of links from the subprime sparks that first flared in the spring of 2007 all the way through to last week’s stunning losses in stock markets around the world.

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Tags: Baby Boomers, Investment, Stock market

Category: Baby Boomers, Retirement