Quote of the Week

My initial plan was to "award" Quote of the Week to the idiots at Our Lady of Sorrows in Arizona, who decided that their baseball team should forfeit the league championship rather than have their players take the field against a team that had a girl playing second base. This decision was made under the guise of respecting religious beliefs and teaching values to the kids, which is simply a laughable excuse. Either way, looking good, Arizona. You continue to amaze me.

But instead, I'm going to give a belated nod to Mother's Day to all the mothers out there, including my lovely wife who, incidentally, is the speaker of this week's Quote of the Week. Without further ado...

This week's QUOTE OF THE WEEK

"You know, when you think about it, the Star-Spangled Banner is a lot like the Itsy-Bitsy Spider... they're both survivors".
                                    - My Wife

True enough.

One thing I've noticed in my incredibly brief time as a parent is that kids have a tendency to force you to look at the world in an oddly simplistic manner--through their eyes, really. Interestingly enough, you can often get some really amazing insights by thinking about life like a kid would.

The older we get, the more likely we are to accept some fairly irrational thoughts because "that's just the way it is". Why is the sky blue? Why do we have to go to work and make money? Why do we need money at all? Why do we do anything? There's something strangely clarifying about re-thinking all of your assumptions about the "real world", and I've been enjoying the ride so far. And if that means that I end up drawing parallels between our national anthem and a kids' song in the process, then so be it. It's fun.

So to all the mothers out there, I hope you all had a wonderful Mother's Day. And to my own mother, I hope I was as much fun to deal with as a kid as my daughter has been so far. And if I wasn't, I'm sorry. I'll just blame it on my older brother, because that's what younger siblings do.

Clip of the Week

Alright, Clip of the Week time. You've actually got co-champions this week, but one of them I'm holding back for your Song of the Week(end). So stay tuned for that.

In the meantime, Bryce Harper is a tool but he amuses me. Go Nationals (and thank God one of my teams is playing well, because the Sox are killing me right now). We've also got one of the better internet video mashups I've seen in a while, combining the "Rent is Too Damn High" guy with the movie "Up". And SNL continued its recent revival with a vulgar but hilarious fake Mother's Day ad for Amazon.

But this week's Clip is going to be another one from the world of animals, because this clip is awesome. Note to current and aspiring parents: don't dress your kids up in outfits that make them look like baby zebras. It's not safe.

 

Relying on the altruism of baby boomers

My parents were very good parents. I always appreciated their selflessness in raising me and my brother--from making difficult career choices at various points in their lives to rearranging finances to ensure that my brother and I could both enjoy the best possible college education--and I hope that I can emulate them as a parent in that regard.

Of course, now that I'm approaching my fourth decade on this planet--with my own job, house, and family to worry about--I'd assumed that my days of relying on my parents' kindness and selflessness had, for the most part, come to an end.

Not so fast, says Ali Alichi of the International Monetary Fund.

As the number of older voters relative to younger ones increases around the globe, the creditworthiness of borrowing countries could decline—resulting in less external lending and more sovereign debt defaults...

Studies have shown that a country's willingness to repay is as important as whether it has the resources to repay. This willingness deteriorates as voters age because they have a shorter period to benefit from their country's access to international capital markets and become more likely to opt for default on current debt. Moreover, older voters generally benefit more from public resources—such as pension and health care benefits—which could shrink if debt is repaid. If the old are a majority, they might force default, even if it is not optimal for the country as a whole. Lenders will take this into account and reduce new lending to an aging country.

There is some empirical support for the notion that aging increases the probability of default on sovereign debt, but more work is needed to draw strong conclusions. Alichi (2008) uses a panel of about 75 countries that have had at least one episode of sovereign default during 1975–2003 and shows that, on average, younger countries (those with a higher percentage of people ages 15 to 59 years) are less likely to default.

Now if the old are altruistic and care about their children as much as themselves, they will not vote for default with its negative consequences for future generations. But Altonji, Hayashi, and Kotlikoff (1997) have shown that altruism does not hold at the overall level in the United States—although there are few studies of this sort for most other countries.

As Alichi acknowledges, the empirical data is not ironclad, but the preliminary findings make intuitive sense. It's already clear that demographics--in short, how many taxpayers there are to subsidize each retired "tax-taker"--play an enormous role in determining whether a nation is financially solvent or not. But the potential impact of voting and politics--especially when we consider that voter turnout among the elderly is historically higher than among other age groups--adds a new wrinkle to the discussion.

None of this, unfortunately, is particularly good news for the country as a whole. Those of us who plan to be here for a while may find ourselves increasingly relying on the self-sacrificing altruism of the baby boomers--and questioning whether the independence (financial or otherwise) that so many in our generation have felt is our birthright is, in fact, an illusion.

[IMF]
(h/t Barry Ritholtz)